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Good morning to all. Thank you for joining us today. This meeting will be broadcast live in both French and English, and then made available on our website for those of you unable to attend. I'll just run through the agenda of the meeting, introduce the speakers. First of all, the opening formalities, the presentation and highlights and results of 2024, a presentation of the climate strategy. We will have a Q&A session, and we will move to the more formal part of the meeting with reading of the statutory auditor's report, presentation, and voting of Resolution, and then closure of the meeting. Today, I'll be chairing the meeting as Chairman and CEO of Lectra since 1991, as Chairman and CEO, assisted by Olivier du Chesnay in the room, Chief Financial Officer, who will present the results.
[Foreign language] , General Secretary Céline Abecassis, Independent Director, Chair of the Compensation Committee, Hélène Viau Poirier, Independent Director, Chair of the Sustainability Committee, Flora CAMP, Statutory Auditor from PwC, and Aurélie Lalanne, also Auditor Representing KPMG. Just present the executive committee of this meeting. Daniel Harari is Chairman. As Chairman of the board, we're appointing scrutineers present in the room, Jérôme Viala, Shareholder, and Javi Gracia. Thank you to both for accepting this important task as scrutineers and I'll be acting as Secretary to the AGM. Regarding the schedule for the meeting, all formalities were completed on time, as shown here, and all the necessary documents for the meeting are available here at head office and also on the Lectra website.
To officially begin the meeting, very important, the quorum of shareholders who voted either by correspondence or gave power, or who are here present in the room, the quorum has been reached of over 90%. It is a provisional quorum and will have a final tally following this meeting. Yes, also important to indicate that we receive no written question ahead of the meeting, nor of a request for the placing of a draft resolution on the agenda. I will hand the floor back to Daniel, then to Olivier for the presentation of the results 2024 and the highlights. Thank you. When we reviewed 2024, it is far behind with the welter of events that have occurred over the past few weeks.
If we just focus on the key highlights for 2024, the results were in line with the latest estimates released in October, and we also revised our estimates to announce that we'd be at the lower end of the ranged amount at the start of the year, but within the guidance in a challenging context. That is proof positive of the robustness of the company and the quality of its figures. The successful integration of Launchmetrics. We acquired the company in January 2024. It's a company that had always lost money, and we managed to successfully integrate it. At the same time, we have profitability of Launchmetrics that was proven in 2024, as expected, and we've improved all the groups of fundamentals, as we will see.
When we look at the situation at the end of 2024, we had continuing geopolitical tensions that decreased slightly. Today, we're back in the red with events between Ukraine and Russia, declining global demand that's improved with the announcement of further tariffs. Things might deteriorate further. Uncertainties over growth in major world economies, and we had the weakness of considering that uncertainty has lifted. Access to credit significantly improved. That's the case. Inflation, energy prices regulated, and trade wars that began at the start of the year. Events are evolving so fast that if we were to give an update, we'd have to repeat it every day. Now, it's on the timeline of the Trump administration tariffs to explain why it's complicated to manage. If you like, we can perhaps dive deeper into where we're at and what we've done.
As you see, there were regular announcements since early February with contradictory announcements backtracking drastic changes. In February, March, it was essentially the Mexican clients of Lectra who worried about the situation. Tariffs affected essentially Mexico and Canada: 25% on cars and certain car components. On Liberation Day, April 2nd, everyone was surprised by the scale of the announcement. It did not tie in with pre-announcements of changes, suspensions of tariffs with China, 145%. We were reaching a situation that is particularly challenging to manage. We will explain how we have managed the situation since. Turning back to 2024, firstly on the market developments, as we can see, clothing sales stabilized. We had growth of 2%. Everyone was expecting us to be down in 2024. Things stabilized. What you see here, this is what we presented in February after results.
Obviously, there are changing situation early February with the 2025 that was particularly promising. Even if there were challenges to overcome, the influence of new CSRD regulation led our clients to work far more on traceability, sustainability. We have an offer that ties in well with that issue and what we saw in 2024. Our major fashion clients were companies that were not all fairing because with software, it's possible to boost profitability. We are not sensitive to the difficulty of this. We are essentially sensitive to uncertainty. When the world is uncertain, clients hesitate before investing. We were hopeful that things were going to recover positively in fashion. Turning to the automotive sector, the situation is pretty much the same. Everyone had pretty bleak predictions. Sales were down 2%. Things were stable. The major development in the automotive sector is the advent of Chinese manufacturers.
It's not a debate of subsidies or dumping, contrary to popular opinion. It's simply that the Chinese are far more advanced in their production and product development methods. If you just look at a BYD vehicle that is now available in France, compare that to American or European vehicles, you'll see the situation is plain for all to see. They're just better. We are seeing a ramp-up of Chinese vehicles, not necessarily reflected in these figures because these are local sales figures. We are beginning to see many Chinese vehicles in Europe and other Asian countries, not just in China. Furniture, even if sales were not that bad, is down because people renewed their furniture considerably after COVID. A lot of refurbishing in hotels and restaurants post-COVID. Once that situation passed, the budgets focused on other items for reasons of uncertainty.
We only change one's furniture when we're confident in the future we want to change the setting or when we move. Because real estate sales are down, that led to less furniture and a tricky situation. It's not really reflected in the numbers, but the furniture manufacturers had planned higher figures and had pre-ordered in 2021. Turning to the 2024 highlights, we ended the year with revenue up 10%, gross margin up 13%, gross margin grew faster than revenue. Current EBITDA, our major profitability metric, up 15%. Quite commendable figures for 2024. Over now to Olivier du Chesnay for the financials.
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Good morning, everyone. I'm Olivier du Chesnay, CFO. As you can see here, you have the results for 2024. Over the next few slides, I'll give you two scopes: Lectra 2023, that is, before we acquired Launchmetrics in January 2024, then Launchmetrics, then the 2024 scope. Those are the stated results before Launchmetrics was purchased. You see that we always have two things on the left: orders for new systems, and on the right, the new SaaS subscription orders. On the left, you can see that business was pretty stable over 2024 as compared to 2023: EUR 144 million of orders in 2024. In the middle, you can see that there are some differences. Perpetual licenses of software - 18%. That's normal because, after all, we are offering our software as SaaS.
That is up 2%, as you can see on the right, up 8%. The subscription orders relating to EUR 11.6 million added to what we had previously. That is, in fact, an illustration of our group moving to Software as a Service. Now, if you look at orders for new systems broken down by geography, over 2024, our business was driven by Asia-Pacific. That is what you can see third from the left, up 32%, something we experience quarter- after- quarter. On the left and in the middle, you have Americas and Europe. At the end of June 2024, we were at -25% for both these regions. In Q3 and Q4, the situation improved, and we ended the year at -16% in Europe, -12% in the Americas. We have seen orders. Now we are looking at the statement.
Here you have on the right a non-recurring income of EUR 144 million, down 6% from 2023 because in 2023, we had the orders passed in 2022, delivered in 2023. On the left, you have the recurring contracts. That is 70% of our revenues. The recurring business can be split into recurring contracts and consumables and parts. Recurring contracts, EUR 193 million, which includes three things, as you can see in the middle. The first is SaaS subscriptions. That's up 26%, which is, in a way, the conclusion and the consequence of no longer having perpetual software sold. You have contracts, maintenance contracts, and then contracts on maintenance. Contracts, maintenance contracts for software. It's only normal that that should go down over time because that's being replaced by SaaS subscription. Equipment contracts, that's the maintenance that we sold for what we sold in the previous year.
We've got a growth of 6%, which is usually quite good because anything above 5% is generally deemed good. Then you've got consumables and parts, which really illustrates the business of our clients. 4% increase for 2024. That's quite good. Within consumables and parts, we've identified the business that we've discontinued that was from Gerber. That was the EUR 18 million and the EUR 16 million. Discounting for these, in fact, the increase in consumables and parts for 2024 was 6%. You've looked at the order books, the sales, and we're now looking at the other parts of the income statement. EUR 485 million for total revenue, up 2%, you'll remember. EUR 526 million if you include Launchmetrics. Then, gross margin. The group is producing gross margin to the tone of 69.5%. Very high, even though it's slightly lower in percentage points as compared to last year.
The fact is that having more of our business is in Asia-Pacific, but the margins are somewhat smaller in that region. Overheads are stable over 2023-2024. EBITDA is up 7% from EUR 79 million and now at EUR 84 million. Here, you see that I'm looking at the accounts for the whole of the year. EUR 79 million is EBITDA for 2023. You get to the EUR 84.7 million and EUR 84.2 million on the Lectra 2023 scope. In the box on the right, you have the numbers for Launchmetrics, which is profitable, adding EUR 7 million. What it means is that the bridge from 2023- 2024 is the green impact, the two bars, and those are in fact related to the recurring business and the model of the company. As you can see, recurring contracts contribute EUR 12.4 million to EBITDA, and the volume effect is EUR 2.8 million.
The fifth bar, also in green, is overheads. That's stable, which offsets the variable overhead costs. You can see with this bridge, with this chart, the way EBITDA developed over 2023-2024. I said EUR 7 million from Launchmetrics, and you have a breakdown here. Launchmetrics is a SaaS business that we purchased on the 23rd of January last year. You can see EUR 7 million EBITDA over the whole year. What were our goals when we acquired this? We expected 10% growth in sales and profitability of 15% or more. As you can see on the right, we were expecting sales of EUR 42 million-EUR 46 million. We achieved EUR 41 million, so slightly less than expected. Launchmetrics is very exposed to the fashion industry. Still good, and the growth is acceptable. We expected a margin above 15%. We posted 16.9% EBITDA margin, so satisfactory indeed.
If you look at the business of the group for 2024, we also generated free cash flow quite at historic highs, EUR 72.1 million. Our working capital requirement is negative, EUR -25.2 million. EUR 72 million of cash generation is something we've never done before, much more than what we had in 2023, much more than the net income on the financial statements. What does this mean? It means that with the free cash flow, we can finance acquisitions. We paid for Launchmetrics with this, spending EUR 77 million for the first tranche of shares. Our debt is at EUR 102 million at 2024, seeing as we paid back the Gerber purchase. Our net debt, therefore, is only EUR 20.6 million, as you can see here. Daniel, would you like to cover the outlook? Yes, please.
Thank you, Olivier. Early February we released the outlook, early 2025 recurring revenue above EUR 400 million and including EUR 90 million of SaaS, EUR 20 million recurring EBITDA, revenue between EUR 550 million and EUR 600 million. The EUR 550 million is the stability of new systems, and EUR 600 million is the increase of 20%. Today we no longer have any visibility and will only form a view on an update of these figures during the course of the coming months when we see how things are evolving in terms of tariffs because the markets are really in a state of turmoil. Our clients face a situation back to the 2023-2025 roadmap that I presented at the AGM of 2023 and 2024. To give you a second progress report, we can say the strategy was well implemented. The roadmap unfolded successfully.
If there's one takeaway of the past two years, it's the success of this roadmap aimed in 2030 to present Lectra as a key player on fashion, auto, and furniture. 4.0 is the four industrial revolution connected with our consumers and creation centers relying on technologies that we're more familiar with. When we review, we had three main goals. The first was to fully leverage the change of dimension of the group to accelerate its growth. Here the result is more mixed insofar as for two years in 2023-2024, we were faced with a tricky cyclical situation. We weren't able to leverage everything. There's significant progress on the two other points: developing the SaaS business, Software as a Service in the form of revenues from software subscriptions and growth opportunities, M&A. Things went particularly well.
Let me remind you that Launchmetrics that we acquired in January 2024 is a company which up until 2022, losing money with double-digit negative EBITDA, which was pretty much positive in 2023. Consequently, the opportunity was many people were challenging the fact that it was genuinely an opportunity. What we can say is that as of today, it's proved to be a very good transaction on the terms of the strategic impact because it's our major clients that have Launchmetric software system creating real synergy in our offering and from the research standpoint, but also in terms of results and numbers. Now, this roadmap internally comprised six objectives. The first was to strengthen all CSR practices in the companies. Orr has been a standard setter in this field, but we've made significant progress over the past few years, starting from the very hard point.
Second point was to leverage all the synergies deriving from the acquisition of Gerber in 2021. Major progress, transition to SaaS transformation of the customer engagement model. When you enter the SaaS model, the rationale is to enter small and grow. Subsequently, we have a major effort to get our customers to have more software upselling and cross-selling, moving from one offer to another and generate synergies across the various offers. Continue external growth, M&A, which is what we did and paved the way for the period 2026- 2030. We also did just reviewing each of these points on the CSR front. In 2023, at the end of 2022, we had 12 commitments in the field of CSR described in the PIRS report. The company was recognized by many media rating agencies, EcoVadis and T-Finance as a standard setter in terms of CSR.
For the third success, we received the label Best Managed Company awarded by Deloitte with a very strong CSR connotation. Every year we poll our teams. It's an anonymous survey, and our people express their views. 60% would recommend Lectra as a great place to work in a year where salaries were frozen. That's a key point. There were reasons to perhaps be less satisfied than the previous year. When we look at the way our offer has evolved, we have two very strong points in our offer. We allow our customers to save them in fashion. Material waste are one of the key factors, often double- digits over 20%. The fashion sector is one of the most polluting in the year. We presented a 1% on 20% save. It is 5% less pollution when we allow our clients to save 5%. It has a huge impact globally.
Lastly, with the TextileGenesis, we allow traceability from the raw material, cotton, to the finished product to make sure that the materials are optimized throughout the value chain. We also took a number of initiatives to develop well-being at work, a major problem led by and the Lectra Way program, a very strong corporate culture shared including by people from the acquisitions. Gerber, Launchmetrics, we made aware our teams in CSR. All products are eco-designed, and everything that can optimize the impact on the environment is brought in from the word go software. And someone who's colorblind to operate without seeing the colors. With pictograms, people who are not capable of reading. There are still some people who are illiterate. Number of countries were really at the high point in terms of eco-design in our tools. They've been factored in for many years now.
All our software systems are eco-designs, and we cut our emissions and in compliance with CSRD, which Hélène will tell us more about in a few minutes. Turning now to the synergies achieved and rising from the Gerber acquisition, and many a number, had we not acquired Gerber, we'd not be in the situation we're at today. In the synergies, we stopped counting the savings at the end of 2021 because we exceeded the target set. Efficiencies were considerable. No layoff planned. We just released a number of managers at Lectra and Gerber. We didn't replace a number of levers, and so the impact on synergies grew. We also upped margins on Gerber. When Lectra was selling and cutting equipment, we had 60% margin, Gerber 20%. Today, we're at 40%. Not the same level, but it's still pretty good.
We developed service contracts, and at Lectra, we have 100% of the equipment sold with service contracts. Wasn't the case for Gerber. We developed that, put in place a new contract, which is more than just a mere repair contract, which was the case for Gerber in the past. We developed the sale of consumable spare parts. More difficult at Gerber than at Lectra because at Lectra, historically, we created great many parts specific to Lectra, so difficult to copy or to sell for third companies. Wasn't the case at Gerber. They're very often used market parts, so there could be competition on parts and consumables. Obviously, it's a major strength. We had three industrial facilities thanks to Gerber. Lectra had one in France at Bordeaux, two Tolland next to Boston, Suzhou, Cestus. In the current context, that's a strength because we can manufacture across the three plants.
Market share increased with good geographic reach, enhanced customer base for cross-selling and upselling of SaaS, additional innovation capacity since July 2022. One year after the acquisition, we just had one research plan with developments that are joint for Lectra and Gerber. About a third of our R&D investments for maintenance of equipment and software that pre-existed and two-thirds of program common to both brands. We are able to leverage strongly R&D spend. We have reviewed our supply chain to strengthen it and optimize it. The integration of Gerber, in our view, is an outright success today. The acceleration of SaaS software sales, the chart shown here speaks for itself. We kicked off with the first software for the SaaS model in 2018. We have gone from zero to EUR 77 million at the end of 2024. Very strong growth. Very strong growth both internally and through acquisitions.
At the top, you have the software that we brought to market through internal development and below the successive acquisitions over the years. Turning to the acquisition of Launchmetrics, we can see there was a strong contribution. Launchmetrics accounted for about half SaaS revenue at the end of last year. We have two software systems that have grown very strongly. Firstly, Kubix Link, acquired in 2018, a company developing a collaborative platform. For those of you who are familiar with the software, it was the first software, PLM, ProtoFly Management, but other collaborative pack. Kubix Link was acquired when it had zero revenue and four people. We were convinced of the quality of the founders, had considerable experience there.
We moved, went from nothing to software that double-digit sales and TextileGenesis to achieve traceability at the end of last year, over 2 billion products transited via the platform. Most clients announce in their annual report when they're listed the use of TextileGenesis to prove their commitment to CSRD and sustainability. It's a solution that very soon emerged as a market leader, only startups on this market. The activity was extended at the end of 2024 to footwear and leather goods. It only covered textile, initially natural, and all textile materials. Lastly, the offer that we reserved to major customers owing to a lack of means to reach more customers. It's a difficult offering to explain and sell. We focused our scarce resources on major clients who now sell to mid-sized companies and by Lectra teams supported by teams from TextileGenesis.
As regards the fourth strategic focus area, we continued the development of the group's customer relationship through customer success managers. Today, we have individuals who are dedicated to clients and help users and decision-makers to better use our solutions to create more buy-in. We separated the role so that the customer success manager isn't just selling to the customer. The customer can work confidently without having any misconceptions about the plan. At the same time, we reviewed the plan. This is a training plan, but it's far more. It's an enablement plan. We train, we coach the teams, be it the sales teams, customer success teams. We support them so that they become on a par with the best practices used in the group. We've launched a great deal from Launchmetrics that had excellent practices in the field.
Let me say that the integration of teams went very well. We found high-quality terms. We learned a great deal thanks to Launchmetrics. Lastly, today, we have 110 customer success managers. That is a major strength. When we look at the acquisition of Launchmetrics, the value proposition is very compelling. Launchmetrics, there are two parts to the launch. When we launch a collection, a marketing portion of metrics, when we assess the impact, in fashion companies, notably in the luxury segment, the marketing budget is the largest budget to optimize the marketing budget. Considerable sums are involved, a double-digit percentage for all the luxury brands. You can see how much that represents. Thanks to Launchmetrics, you can measure the impact of each individual action in the database.
They're considerable, about a million influencers, individuals tracked by all the media, paper, press, online outlets, all the statements. When there's the inauguration of Notre- Dame, there's a film on the evening news. With the software, we can spot what every personality is wearing during the ceremony. We know that Madame Macron was wearing a Vuitton outfit and a Dior bag. We can see if the photographs are published at a given point had an impact on the traffic of client sites. A very precise measurement allowing us to spot things. Chiara Ferragni, who's the leading European influence, one day wore a Chanel bag. It was just a few days after the acquisition of Launchmetrics. We were at a financial conference at 9:00 A.M. We show the shop that's just been released. 9:30, the second investor. There were 500,000 likes.
People had clicked to say they liked the shop. This photograph brought in more than a campaign in Vogue. We can see how much the world has changed, the importance of influencers. Jacquemus has a fan, Madonna. The fact that Madonna bestowed that accolade on Mus reflects the success of the brand. The only way really is to measure detail of what is happening. These are databases of photographs, of films that number millions, indeed billions, in the field of big data and AI because, of course, we need to be able to analyze all that. The entry barrier is very high, such as a company to compete with Launchmetrics. What is specific with AI? It is based on data quality. This quality took years to build and then educate the algorithms. At Launchmetrics, we recognize your values. 93% of clothing and faces automatically.
We educate the algorithms to recognize. The cost to recognize the 7% assisted by operators who place a caption by hand on the films is high. We're at 14% of shots that need to be tagged to indicate things. 7% then, of course, we halve the cost. That is very important. We have a barrier to entry that is very high. The weaker point of Launchmetrics was a low financial culture because it developed through acquisition managed by private equity, essentially looking at the growth of non-recurring revenue and not at all EBITDA or the cost. In a year, I think we've crossed a major milestone. We had the first cost synergies achieved. We're able to pull a number of IT tools necessary, of course, to AI, but also to operate the offices, the premises. Today, the Launchmetrics teams in Paris are located in these offices.
Lastly, we've included them in the Lectra Way program mentioned to have a shared culture. It wasn't too difficult because the culture was very similar to that of Launchmetrics at Front very well. In 2024, we signed two strategic partnerships with two startups specialized in AI, the idea it's the equivalent of an R&D program with people who are at the cutting edge of AI, but will still have R&D development for the next three, four, five years because these are long-term developments that require educating algorithms at length. Two companies that were ahead of us by a few years, but we felt that those few years were they worth having a partnership. We took a minority stake, planning to acquire 100% of the company over the next five-seven, with assisting them in development, design, customer presentation to have a few pilots on these offers.
Sixth point was to prepare Lectra for the next step with sustained R&D investments. For many years now, the company is investing more than 12% of its revenue in R&D. Today, that's about 700 people devoted to R&D, 600 engineers, and about 100 people doing product definition, test quality. We put out three major innovations in 2024: a new generation of new cutting equipment. It's about 20% Vector, about 20% of our fabric cutting. This innovation was common to that of Lectra and Gerber. Replacing both Lectra and Gerber equipment, we reduced our power consumption, environmental footprint, about 30% as compared to the previous generation. First in class, we added a huge amount of AI. Our equipment is stuffed with sensors that transmit information to the software, which is a machine pilot and can analyze and change the cutting plan in real time based on the inputs from the sensor.
Secondly, Valia. Valia first launched on furniture in January 2024 and a launch on Valia Fashion, which is the major market, in October 2024, the largest research program ever undertaken by Lectra. We believe that it's a revolution in the world of fashion that hasn't occurred for some 20 years-30 years. I'd even say since I've been head of Lectra to manage digitally on a digital platform, the customer's production, starting from model design, every item of clothing has a digital double, and the whole value chain is simulated digitally with a great many algorithms who decide after education by many experts. There's no deterministic solution in fashion. It's all experience-based, and this experience is held by a limited number of experts. We analyze about the input of 1,000 experts, and we modelize the behavior of Valia.
If I want to manufacture a particular garment, is it better to get it made in a particular country, particular factory? It's very complicated to explain to a manufacturer in Indonesia. There's more humidity. The fabric will shrink. Some are better manufactured in Indonesia and others not. It's best not to go to a country that doesn't meet the requirements of your fabric. There are plants specialized in certain fabrics. With Valia, of course, once you produce your plan, it can be changed daily. You have orders that vary. You have a change in fashion such that certain models are sold better than others. You can radically change your plan and manage real time. You have a problem somewhere because you've got, say, a plant that's on strike. You can shift the production 24 hours onto another plan, or the characteristics will follow.
It's a unique tool in which the difficulty nobody was expecting. It didn't exist. There's no software that is close to similar to Valia. There's no budget for Valia. People weren't expecting for us to have this software. We want to convince customers to spend money for Valia that brings very significant value.
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We've also beefed up our executive committee by appointing two more people: Antonella Capelli, who was the deputy leader of our Europe team, who took over from Fabio Canali, who retired, having served with Lectra since 2004. He had been bought out when we purchased the Italian business. Antonella has taken over that team. I believe that Antonella and the Italian team are responsible for the great success for Kubix Link in Italy. Across the world, we have a 15% share market, but in Italy, 65% immediately.
We also appointed Michael Jaïs, CEO of Launchmetrics, who is very useful in that he knows the SaaS environment very well, which now brings me to our product offering that is changing and developing. As you can see here, there are five bubbles that give a presentation of our product offering. First of all, in the center, Kubix Link, which is really the bridge between all the business for fashion. In manufacturing, we've just got Valia. Basically, in fashion, we've got creation, manufacturing, and marketing and sales. On creation, we have a number of pieces of software that have been established over the last 20 years, and something will come in the next three years to replace these. In manufacturing, Valia is just taking over all and replacing all the previous software we had and being more effective.
You can see up at the top the pieces of equipment that are interconnected with Valia, which will give it instructions. They will look at the various ways the fabric or the material reacts: retracting, for instance, or crunching, or whatever. There will be captor sensors. Valia will then adjust the production plan accordingly so as to optimize the use of the fabrics and materials available, for instance. This will then improve the production plan and have an influence downstream on the marketing project and mix. In marketing, we have RETViews and Neteven. We also have traceability that covers the entire chain: TextileGenesis. On the top left, you have Lectra's and Gerber's historic software, which will be replaced over the next three years in the Create bubble. Which brings me to Hélène.
Hélène here is our independent director who chairs the Sustainability Committee, or previously known as the CSR Committee.
Hello. It's the first time we're presenting the climate strategy within Lectra. As you will have understood, we take all this very seriously at Lectra, and it really has pride of place in the three-year strategy. The idea is to give you an idea—the purpose is to give you an idea of where we stand and the commitments and undertakings for 2022, 2030, and maybe also give you a sense of what we are doing for 2024. Of course, there's a bit of jargon: what was scope? Scope one, scope two, scope three. I'll come back to that in a minute.
The point there was to really use 2022 as a reference year with clear and specific measurements of our emissions across the board and systematically, meaning that we look at our direct, indirect emissions and look at the entire value chain for Lectra's business. To better understand what our undertakings will be by 2030, we have to take into account, of course, the commitments made in 2024 and the drafting of a clear roadmap. Let me try and explain. What we did in 2024 was to, again, have a starting point, a reference point, to get an understanding of what our emissions were and what our impact is, with the reference year being 2022.
A number of workshops were organized within Lectra to identify the priorities, to see what we can do, where we can really make a difference in terms of emissions reduction, and then set up the right kind of organization to implement this and monitor it and report back in the sustainability report. I'll come back to what scope one and scope two are, but basically, scope one is direct and scope two indirect emissions, including from energy. Scope three is all the indirect emissions from, for instance, the shipping of our machines, the purchase of raw materials, the onboarding of our software by our clients, and anything of that kind. What are we committing to? We want to reduce our emissions by 25% in scope one and scope two, which is significant, and 20% on scope three.
Over the course of last year, we have identified a number of ways to get there. On scope one and scope two, we're mainly reducing our energy consumption and also increasing our share of renewable energy sources, mainly at Lectra, and also the introduction or increase in the number of electric vehicles in our vehicle fleet. That's what the teams and the staff here are doing. On scope three, which is very broad and diverse, we've identified a number of ways we can do something, and that is the power consumption and electricity consumption of the equipment and material we have. I'll try and show you a bit more about what this means in a minute. Scope one, scope two, you have the starting point in 2022, the target, - 25% by 2030. You see here the various ways in which we can get this.
First of all, get it buying and purchasing 50% of renewable electricity, then reducing our electricity consumption, and then also having a proactive policy to switch to electric vehicles for the company. On the energy consumption, we've given undertakings on gas consumption. We have sites in the U.S., for instance, operating on gas. We really want to have an increasing share of our electricity produced by ourselves with solar panels, for instance, and we really want to be able to produce 15% of the electricity we use on that site system. So much for scope one, scope two. Scope three, as I said, is much broader because it's upstream and downstream in the value chain. Maybe it's worth reminding ourselves that there are two value chains.
First of all, there's the value chain relating to equipment and the one relating to software, and they're very, very different from one another, both upstream and downstream. That is what you can see in the sustainability report. It means that we can be clear-sighted in what our upstream and downstream impact means under scope 3. Basically, what we see is that when we give soft or hand over software or equipment to our clients, that basically uses up electricity. The objective here by 2030 will be to reduce by 20% the consumption of the equipment we manufacture and roll out. There is something that can be done on freight and air shipping.
We have already been working quite some time on this issue at Lectra when we are looking at eco design or environmentally minded design, how we can factor the shipping or the transport to our customers under that heading too. We have been working on this for some time, and we will go on doing so. We really want to keep in check as much as we can the emission levels under that heading. There is what we call scope four in-house, if you will, and there is no obligation there, no regulation. Basically, how shall I put this? As Daniel was saying, when you do eco design of our software or of our machines, we really factor in this need to reduce electricity consumption, and that has an impact here on scope three and the consumption of equipment, places, and services sold by Lectra.
Once we've sold our products and handed them over, equipment or software, we want to try and make sure that our clients can themselves, once they've received the equipment or software, limit the consumption of materials and electricity, for instance. We really want to offer them SaaS solutions that are really in line with the market needs for the broader Lectra ecosystem. Thank you. Thank you. As you can see, we were already quite dedicated to applying the CSR regulation. The numbers, the absolute numbers, are really not that big, but we are trying to improve further, even though we've been very good at in-house and also at looking at these things on the impact with our clients. There we go. Any questions? Yes? With a microphone, please.
Yes.
Could you tell us what use of AI you make within Lectra to date and also as concerns the marketing of Lectra? We understand that at launch, Metric is particularly high, but what about the entire group?
Lectra has been doing Artificial Intelligence since the very beginning. When I joined in 1991, we were already using Artificial Intelligence. Of course, nowadays, what we're talking about is Generative AI, or at least that's the one that people are most familiar with: ChatGPT, etc. Within the industrial world, we manage data, and it's true that with the internet, there's been an increased access to data, a lot of it, but a bit higgledy-biggledy. AI basically has to operate on the basis of fuzzy data or missing data and make the most of it. I mean, look at Amazon.
They can only make recommendations on the basis of what you have clicked upon and looked at before. In the industrial world, it's a bit easier or was a bit easier because we managed and controlled some of the data. What we really wanted to do was to make sure that this would fit into our basic ways of operating. That's been true ever since 2017 when we launched the Lectra 4.0. We already had data for creation and production. What Launchmetrics brought is marketing data and Kubix Link also, as is also TextileGenesis, which is bringing more data. We have these five data sources, and we can apply AI to it. We already had AI in our machines, not so much for the creation software because they were really seen as a toolkit, and we weren't too sure how people would launch them.
We will use AI in the new Create bubble that I mentioned earlier. In Kubix Link, there's also a lot of AI algorithms, and it's also true in Valia. We have AI across the board. In-house, we launched an AI use program to educate our staff, and we're looking at two things: a cross-cutting approach, a horizontal approach, so that people can use Copilot, a bit like ChatGPT. We have this across the board in all our desktop software, if it's only to translate memos or set up reports. For instance, we were able to translate the PowerPoint presentation so that it can also use the in-house vocab. We also have some pilot programs for applications of AI in our clients' businesses. We've got one pilot test in the industrial division so that you can get a better understanding of what might be worth testing.
The software will say, "These are the three most likely causes of failure, and this is what you need to test," for instance. Second application or second use with customer service: when clients come with questions about equipment or software that is, I do not know, 20 years old, for instance, because there is maybe a loss of institutional memory, the AI will be able to factor in all the previous interventions and what was said or done in the past and will identify probable cause. Now, again, as the case for Launchmetrics, as I said, you learn more as you acquire experience and will speed up the process in 2025.
There is also what we do in marketing when we analyze markets, analyze clients to get a sense of what analysts have said and done maybe in covering the annual reports and the reports they write on our customers so that we can get a better sense of all this. Yes, AI will really be a key feature of our roadmap for 2026, 2028. Yes? Sir? Yes? Sorry, myself.
Along those lines of vertical, horizontal, I expect you have a tremendous issue in terms of organization with the Launchmetrics and the Gerber databases already organized. I mean, Lectra was a tiny team 50 years ago, so how are you managing these?
We are, of course, forever trying to improve and use the teams as best we can and to adjust our organization to our strategy and our roadmap.
Every three years, with a new roadmap, we've adjusted the organization. We're getting ready to do so again over 2026, 2028. What we can say, the fact is that for Valia and the cutting room world, you have people who are focusing on customer success and marketing and commercials. Commercial and customer success is basically what we have out there in the field. For other SaaS software, we really want specialized teams. For major accounts, of course, we'll have someone in the forefront with support in the background. That is, in fact, what we expect will be going to because it means that the expertise can be presented to the clients. In R&D, it's organized according to the products. We have corporate HR, finance, and geographies.
Geography leaders manage customer success, and all the finance is managed from headquarters or HR also. Of course, this will change over time as we get ready to introduce the 2026-2028 roadmap to be announced early next year. Yes, please.
As concerns your results for Q1, can you tell us a bit more per sector about what the clients are saying? Maybe a second question on Forex and the Forex impact on guidance. I seem to remember that it was 1.04, the Euro to U.S. Dollar in the guidance. Back of the envelope calculation seems to suggest EUR 12 million on sales and EUR 5 million on EBITDA. I do not suppose you are hedging. What do you intend to do to manage this?
I know you probably don't want to adjust guidance just yet because there's something else related, not related to currency exchange, but something related to events on which you have no hold. How do we manage the Forex impact? Third element, the balance sheet. I seem to remember your net debt is below EUR 5 million. There'll be a cash out because of the second tranche of Launchmetrics in Q2. I expect cash generation will be preserved. However, I would say that the tariffs that you mentioned earlier have already been factored in the financial world. We get a sense that either we'll have escalation now that all the announcements have been made, and there is already something of that at hand, or there'll be adjustments and we'll muddle through.
Could you maybe not make the most of your balance sheet to buy back shares that seem particularly appealing nowadays? What's your view of this? Do you expect to speed up share buyback to have an equity perfect for all those investors and shareholders who've been with the company for a long time? What is that? And what about M&A?
If we look back on Q1 in March, it's our U.S. clients producing in the automotive sector in Mexico that were in panic mode because, of course, 25% additional tariffs was obviously not easy to absorb. In practice, things were perhaps a little overrated. The NAFTA agreement was maintained. 65% of Mexican output wasn't taxed. This announcement indicating that the impact will be reduced down was a psychological impact on.
The 2nd of April, President Trump turned to a union rep showing how much scope there was to rationalize automotive production in the U.S. It was really there for rhetorical effect. In practice, our U.S. clients in March were the only ones worried about what was going to happen, perhaps because they were more sensitive for practical reasons. They were closer to all the statements. Our European or Asian clients were not expecting this situation, all the more so in China. There were already the two, 10% hikes, and Chinese clients were expecting it to stop. Things changed in April after the April 2nd announcement where we can say that the real debate began. Situations vary by market. I'll describe them. Automotive has been operating by hubs. For decades, it is a near-assuring logic for the U.S., a large parts manufactured in Mexico.
We're brought back to the question, what's going to happen, how things go involved in practical terms. I don't think the impact will be as high as what was feared by clients because a large part was preserved. With a number of modifications, Mexican output could escape the tariffs as long as they source components from the U.S., that final assembly in the U.S. Only vehicles fully assembled in Mexico would seem to pose a problem today. No impact in Europe. The hub's regional. No impact in Asia because the hub's regional on auto. The real debate hinges on output in Mexico. On furnishing, that's regional. Practically no impact. Furniture doesn't tend to travel. Shipping costs versus the manufacturing costs, far from negligible. The furniture is manufactured locally. A lot of furniture is still made in the U.S. The impact on furniture doesn't represent much in revenue.
It's not impacted by tariffs. Fashion is the most impacted. To give you a couple of numbers, in the U.S. today, 1% of footwear sold in the U.S. is manufactured in the U.S., and 2% of garments. There's no leeway to grow that number significantly. If we take all available resources, we'll reach 3% or 5% locally manufactured, and then there's no labor availability or know-how. Fashion will remain imported. Today, the current situation is a shock for all our Chinese clients who were the first to be targeted, had set up factories in Vietnam, Cambodia, or elsewhere to ship to countries that were free of tariffs, and tariffs are set to cover all Asian countries.
The real question that will arise here is what will be the tariffs for the Asian exporting countries, for China, but above all for Vietnam, which is a big exporter, Cambodia, Bangladesh, now India, not too affected by tariffs, that has an industry that has upscaled considerably of late. The real debate will be how will our Asian clients emerge from this episode. There is one area we do not have visibility at the level at which tariffs will go in these countries. In fashion, no one manufacturing. We just have one software business fully protected because software and services are not impacted by tariffs. Our service software business is currently protected worldwide. When we look at the situation in Europe in a challenging context, Europe will either be on a par with Asians or in an advantaged position.
As we look at imports in the U.S., everything's imported either with European or Asian tariff. I'm a European. I'm not happy to have tariffs, but I have an advantage of my Asian competitors. Who's upset by the tariffs? It's the U.S. consumers. What our clients worry about today is the U.S. consumer is going to buy less because prices will be higher. The big debate is the cost share between the consumer, the retailer, and the producer or the brand. We will look at that closely, how markets will balance out. The real impacts in Asia, about a third of our clients manufacture for the Asian market, not affected. A third for the European market, not affected. We're talking about 1/3 of our clients who are subcontractors in fashion. Lectra in the U.S. essentially auto, so that's about 15% of our revenue.
We have a small percentage of our revenue that's truly impacted by the situation. The problem is the fear syndrome because there's been so many announcements, everyone wondering what's coming next. Everyone's in waiting and Simo, the sooner we're out of this episode, the better things will be. We don't know how far tariffs will go, and we'll arrive perhaps at a reasonable position accepted by all. People will say, what's going to happen in one or two years down the road? It's going to create wait and see. Wait and see is our number one enemy. People hesitate things twice too before investing, worried about how things are going to pan out. We have a large part of our revenue, as I said, not at all affected. All recurring revenue is not concerned. When we sale the new systems, that's about 1/3 .
We can say 1/3 is sensitive to the issue, 2/3 not. We're talking about just over 10% sensitive to the situation. There are side effects, including plants that are not affected today, are wondering what's going to happen. That's the impact today. In terms of our actions, we take two short actions. On prices, we pass through the impact of tariffs and the declining dollars on our U.S. prices the day after tariffs were introduced. We even in Q1 refused orders for which we had a transfer that was in place or that was due to pay a deposit to renegotiate the partial cover of tariffs by clients, saying terms have changed. We no longer apply the prices that we've negotiated, even for orders signed. When the tariffs went to 10%, it was easier than when they were announced at 20%.
Second impact is in terms of shipping logistics because today in the U.S., 1/2 of equipment sold in the U.S. is produced in the U.S. We're the other 1/2 of the equipment on which we have no local competitor. At best, we're on a par with everyone or at worst with everyone, and at best better than all our Asian competitors because a lot of these cutters are manufactured in Asia. Notably, China creates disruption, but we're rather more advantaged than disadvantaged. The other factor is for years, our clients, notably automotive in Mexico, close to the U.S. border. All shipments were done via Houston, and we rerouted all traffic, all vessels and shipments to Mexico to Veracruz. Further away from France has the advantage of not transiting by the U.S., not generating tariffs.
We put that in place the days following the announcements, and that's working very well today. If I look at the direct impact of tariffs today, it's very small. If I look at the competitive impact over time, we'll probably have an advantage over our clients, not just that we're manufacturing across the three geographic hubs, which is we have a very significant portion of recurring revenue, which our peers don't have. If sales decline, they can either shrink their sales force or their R&D team. Necessarily, it'll be to their detriment. Look at the situation simply. It's necessarily worrisome. We've done everything we can today. We're well equipped to address that. We can't control the way in which things will evolve or the psychology of our clients. We can try and reduce the impact.
Experience have shown these past years, it's not when times were tough or margins smaller that our clients weren't buying. Our SaaS software that's viewed as a spend, as an expense, is viewed as an investment and offer a return. It's not viewed as an unproductive expense, but a way of improving one's earnings. On the SaaS business, the situation, as soon as it stabilizes, will have no impact or even a positive impact. The real debate's on the equipment, and the debate on the equipment is dependent on the wait and see position of our clients or the concerns that stem from that. If we look at the company, aside from the impact it might have on our share price, that could, of course, be significant. Our fundamentals are strong. Whatever happens, we hedge 94% of our costs through recurring business. We cover it.
In January, we exceeded the break-even of the year. We're in a situation where earnings will vary up or down, but we can view the future confidently. That's not under threat. It's a position I've always defended. We need to have a mid-long-term vision to stick to it, but to adapt to events, of course, where things do change. It might require a few decisions to be made at the margin, but we assess that the situation will be beneficial mid-short term. For COVID, we decided to acquire Gerber in April 2020. 80% of our clients' factories were closed. A question put to us at the AGM, what have you got in place in terms of restructuring? We didn't put a place a restructuring plan. We acquired Gerber under good conditions. To answer the last part of your—no, we don't plan any share buybacks.
There's no resolution that allows us to do that. Our commitments are the credit facilities. EUR 100 million doesn't allow us to do any share buybacks. With the credit in place, we have to reimburse it. We believe that there will be huge M&A opportunities at conditions far more favorable in the next 18 months because we're seeing very interesting companies. Have in mind an overstated valuation, overvalued, because as soon as they put the word AI, they think that they're worth a lot. Overrated because there's been inflation on valuations with the funds, hopes of IPOs and sales that are disappearing. We have funds that own these companies or major shareholders that will end up with a reduction of their means, compelling them to reimburse their shareholders. Coming to the end of the road, they'll look for successors.
Successors are fighting shy because the exit opportunities are shrinking. We expect to see real M&A opportunities. We've shown our proof for Gerber and Launchmetrics, our ability to integrate companies at the initial valuation was very reasonable in both cases given that situation. For cash, we will serve far more for M&A deals than the interest for us is to reduce our net debt to have more leeway. Just to return to the numbers, in Q2, we have the dividend, about EUR 15 million, and the second tranche of Launchmetrics, just under EUR 25 million, total EUR 40 million. As you can see, we're generating enough cash at the end of the quarter. Maybe our debt will reach EUR 30 million, but very reasonable net debt given this situation. It gives us a lot of leeway. Perhaps I'm repeating myself here. I think I've said this at many AGMs.
What counts for a business is to sleep soundly at night. We take bad decisions when we do not sleep. I sleep soundly because we are doing what it takes. We are strong, resilient. We have an ideal balance sheet in this context. We have strong ratios. The fact that we cover 94% of our expenses and that will grow over time is conferring on this visibility. Of course, short term, we are going to be prudent. We are going to err on the side of caution. Of course, our service contracts will continue; we will streamline costs even further, but in the current comp, we just have to grit our teeth and wait. It is as simple as that. Oh, and the currency, the forex. Yes. Currency, of course, there is an impact. If I am not mistaken, your maths is correct. There is a direct link between what is happening and the dollar rate.
It's not just a change in the currency rate. It's a new geopolitical balance that is emerging and will result in different exchange rates. We can't do much else than see those develop. Our position has been not to hedge our currency flows. We can hedge the long term. When we hedged three, four, three, six months, we have the same—we've hedged all the balance sheet per se. No balance sheet risk. It happens that I majored in Stanford in 1980 on the currency markets, and I thought about it. Every time we took a decision, a hedging decision, it was the wrong decision. It teaches us modesty. Our position, our view, is that the impact, of course, can be regulated over time. We've hugely reduced the impact through the acquisition of Gerber because we balanced out our revenues and costs with Renminbi, the plant at Suzhou.
Same currency, natural currency hedge between expenses and income, and we hedge the balance sheet. That may change, but it's difficult when there's high volatility. The hedging cost is high, and things have to move a lot to be reimbursed. If you could use the microphone as the session's recorded. Thank you. With the ramp-up of recurring revenue, you're going to have less volatility. As SaaS rises, you may be able to hedge the currency exposure. It's almost naturally covered because our teams are proportionate to the SaaS revenue in each. There's a natural hedge. Our dollar exposure has shrunk, so we'll continue to reduce it through the natural impact of recurring revenue in the currency where we have the costs. We have the teams to service the customers where we cash in the same currency. The natural effect is very strong.
Claude Laroche, a new Lectra shareholder.
Thank you. Your 2026 outlook, you plan to achieve revenue higher than EUR 400 million, of which EUR 90 million of SaaS, Software as a Service, in other words, about 20%. Designer and distributor of software, you're moving towards a company selling a service, which brings me to my first question. What are the EBITDA margins of the software distributor activity, and what are they in a service supplier activity? Second question, how do you see the split of revenue in five years in these two segments, distribution and SaaS? As a follow-up question to that, you're going to reach almost a market cap of EUR 1 billion. You'll be almost have a unicorn status. Opposite this EUR 1 billion, you have EUR 375 million consolidated equity. Isn't there a manifest undervaluation of your balance sheet? Thank you.
Thanks for those questions. Just a few point.
was born in the field of software. Our first product was computer-assisted design. We have been in the software business from day one, and we are a creator, not a distributor. We create 100% of the software that we sell. The transformation and SaaS for us was a major opportunity for two reasons. The first is that it was very difficult for us to put a price on our software. We are already at three to five times the price of our competition. We could not up our price. Initially, the comparison was done in a selling position. With a subscription, we can up it over time. We can enter at a reasonable price and up the revenue generated over time because at some point, it is on the value brought and not the comparison with the price of the competition.
Software as a Service, we offer a service that combines expertise, AI, and software. All our services are a combination of the three today. The software is a subscription. It enters a monthly settlement, and people pay annually in advance, but over time. We have Artificial Intelligence that is in the SaaS platform, but also in our expertise centers. Lastly, we have an expert who can bring an expert eye on the result of the AI or the generated data. The real value lies in the capacity to combine the three. A lot of synergy between our industrial business to sell equipment and SaaS. We see this with value. The two are closely intertwined. I mentioned value for the equipment to manufacture. You have to create the data, and value are in creation. Marketing software in Kubix Link, in TextileGenesis that traces the whole value chain.
We know which client outsources to whom to do what. It's a coherent whole. It's very difficult to know what the margins generated by activity are. The decisions we could take to assign costs left or right would overstate the reality. We tried to do it a couple of times. It's very tricky. As we've seen, we're in investment period on SaaS software till the end of 2023. We had R&D budgets as in SaaS. 75% of our R&D teams work on SaaS software, current or future. We have R&D spend all booked as expenditure that onerous in terms of SaaS, but constant. At the margins, we've optimized a great deal. We sell a SaaS software. We have a gross margin in excess of 90%, very high in the SaaS world, having paid Amazon, Microsoft for the cloud-based services. We also have marginal costs.
If we take an additional Euro in SaaS, we generate 60 cents, and in industrial sphere, 30 cents. We're very sensitive to the increase in revenue. The more SaaS revenue increases, the more SaaS margins will increase. It's difficult to say what they are and what they're not. Depends how we treat R&D. We take it as a spend. If you depreciate it over the lifetime of the software, they're already high for the spend. We have the expenditure that will accrue over the coming years. Obviously, the SaaS potential in our total revenue will increase sharply, firstly because it's natural growth through the addition every year of the new subscriptions. The value of the software is proven. All our offers—we had several hundred customers today who have been users for quite a while, for several years, save for the very recent ones.
We have a value that improves over time because we're enriching our offers with the experience derived from customer feedback, and we monitor directly what's happening today. We're entering—we have over 1,000 servers that are monitored by Lectra directly with all the SaaS software. As when Hélène mentioned optimization environmentally, we've optimized the use of servers. It's crucially important for what comes next: pollution with the use of AI that consumes a lot of power. All that's going to grow over time. Unfortunately, we market cap, I mean, just over EUR 1 billion. EUR 1.5 billion a while ago, just over EUR 1 billion this morning. I don't know if we're a unicorn or were a unicorn or will become a unicorn. I have high hopes going forward. You're right on one point. The Lectra fundamentals are far stronger than the valuation of the market.
The analysts give it a far higher value. There's a fear today on the part of shareholders that things will worsen further. I mean, I'm not here to judge. By definition, we depend a great deal on the anxiety-inducing attitude for our clients and shareholders. That's probably what determines the stock price. If we consider the fundamentals, people will say SaaS business is worth EUR 1 billion. We take the SaaS ratio, EUR 2 billion with the industrial activity. We have a discount of 2. Everyone's running scared. I don't know if the numbers are the same. We strongly believe the fundamentals of the company are far better than what is shown in the valuation. Not for me to judge. A shareholder decides to buy or sell. It's his absolute rate decision. We'll see what happens. We're strengthening the fundamentals year by year, role as management to boost the fundamentals, improve them.
We've done a substantive effort these past few years that's very sound, that has borne fruit. Difficult to read because every time we have cyclical events that play against it. It's anecdotal. All the announcements on the final day of the quarter are such that we were expecting to have double-digit growth of orders early March. Then we had the first announcements on tariffs in Mexico, and then the fear around the April 2nd announcements. Every time there are things that play on the long term and the short term very strongly. I'd be very prudent. The fact that we can't control what's going to happen. Hence, we consider that today we can't reassess the end-of-year targets. It can be better, less good. We're expecting short-term difficulties, but midterm, we're better armed than our competitors to face the situation.
If we look one, two, three quarters, we'll probably be impacted negative. If we look two, three years down the road, it's probably the opposite. Not to mention M&A opportunities that were generating more cash, and valuations are declining. I'm hugely confident in the future. I think the situation's difficult, but when the situation's difficult, we're armed to face it. It's easier when it's difficult. Though we're not equipped, we can grit our teeth and wait. Obviously, that's important.
One last question, maybe.
Yes, briefly.
About tariffs, and I'm trying to understand. In 2019, under the first Trump administration, tariffs had already been introduced. How long had it taken for things to settle down, to work out? One quarter, two quarter, three quarters? How long did it take for your customers?
There was no impact on us because the tariffs on the automobile industry were soon suspended because American brands were manufacturing less in the U.S. than other companies, and therefore the tariffs were suspended after some lobbying with the president. There was no impact there. The impact on Chinese fashion was very limited. Insofar as it only affected those products that came from China. Our Chinese customers were making deliveries in the U.S. from other plants they had elsewhere in Asia. There was also a minimum amount, so there were only tariffs on any sales above $800. Shein, for instance, was repackaging things, and there were all sorts, therefore, of loopholes. This time around, the loopholes have been closed, and we're in a very different situation compared to what it was under the first Trump administration, where nothing really happened.
Anyway, let's now move on to the next phase of our shareholder meeting. Yes, the statutory auditors will have the floor. Flora for Pricewaterhouse and Madame Lalanne for KPMG. Mr. Chairman, ladies and gentlemen, thank you for giving us the floor. The statutory auditors, KPMG, represented by Aurélie Lalanne, and PwC, represented by myself, have audited the 2024 accounts. We have issued a number of reports. First of all, the report on the financial statements, Lectra S.A., also the consolidated financial statements, a report on related party agreements, and a report on the sustainability report published for the very first time by Lectra following the coming into force of the European regulation, the so-called CSRD regulation, which provides for reporting on ESG issues and other obligations that are much wider and further reaching for listed companies.
First of all, on the financial statements, I will introduce those, and my colleague will look at consolidated statements and related party agreements, and I will come back with the sustainability issue. On the annual statements, we are able to certify that they are true and give an honest representation of the financial situation of the parent company. During the audit, we looked at the sales and also as concerns the equipment and pilot software being exported. We recognized that that was a key feature in the audit. In the management report and the governance report, we looked at them and we found no specific comments to make either.
[Foreign language]
[Foreign language]
On the first, the first one that was actually part of the consolidated statements, there were no specific comments to be made. My colleague mentioned already exports, so we have something to do and to say about acquisitions. This accounts for about 45% of the assets. This amount will change with the recent acquisitions made by Lectra. We implemented specific measures to perform the audit. We brought in our valuation experts from both firms. We identified a number of things to mention. For instance, the purchase of shareholdings in other companies. So we're discussing here recent acquisitions. For instance, the acquisition of Launchmetrics that led to something like EUR 150 million being accounted and booked as debt, accounting for something like 16% of the whole balance sheet.
We also involved our experts in these issues. Last, a specific audit point. In 2021, you'll remember that we had looked at the acquisition of Gerber. We did very much the same thing this time around with the acquisition of Launchmetrics, looking and making sure that the acquisition of Launchmetrics was properly accounted for and properly booked as concerns maybe more specifically the first half of 2024. As concerns the specific checks, there are no particular comments, as you will have noticed in the reports that you received. We also looked at the compliance of the consolidated financial statements with the European single electronic reporting format, as is stated in our report. So much for the consolidated financial statements. Our third report is the special report on related party agreements.
There are no new related party agreements signed over the course of this financial year, and there were none in previous years for which their effects would have been felt over 2024. Any agreements are, in fact, normal agreements under the usual conditions. I'll give the floor to my colleague on the sustainability report. Yes, as I was saying earlier, Lectra issued in 2024 its very first sustainability report in compliance with the CSRD regulation. If you're not particularly familiar with this, let me tell you that the purpose is to give assurances on compliance for three things that you can see up here on the screen. First of all, compliance with the so-called double materiality process, meaning that the company must assess the impact, risk, and opportunities, both financial and ESG, hence the double materiality.
The legislation under the new European ESRS issues provides for some 400 data points to be shared. Lastly, there is the issue on taxonomy, which was, in fact, already included in previous years and no observation here. On the basis of the work conducted, we have come to the conclusion that no significant inconsistencies were identified. We have only made one observation, which is true for most listed companies across Europe, and that is the methodological limitations and the uncertainties inherent in the fact that this is the first year of implementation of the regulation. This being said, the observation does not in any way, shape, or form challenge our conclusion of compliance. Thank you.
Thank you, ladies. We now come to the last phase of our meeting, the agenda and the resolutions. On the agenda, we have 14 items, 14 resolutions, 11 of which come under the ordinary general meeting of shareholders, so you require a simple majority, and three come under the extraordinary general meeting, requiring therefore a two-thirds majority. Before we move on to the voting of the first Resolution, we have a show of hands, and our team from Société Générale will take down your votes. Maybe the final quorum is 90.6%, taking into account all those who have signed off. I think we can now move on. Resolution one, approval of the parent company financial statements as found in the financial report. I'll remind you that the profit is EUR 24,399,430. Cost excluded from tax deductible is EUR 127,043. Would you please raise your hand if you vote against or abstain? No? Thank you. Given the correspondence vote, etc., the resolution is passed with more than 99%. Thank you.
Resolution two, approval of the consolidated financial statements to be found in the financial report and as presented to you earlier by Olivier. I'll remind you that the net income group share stands at EUR 31,163,506. Let's vote. Please raise your hand if you vote against, if you abstain. No abstentions either. Thank you. Given the votes already received on internet or by proxy and in the room, the motion is passed with more than 99% in favor. Third Resolution, discharge of directors. You are required to grant a discharge to the members of the board for what they did in 2024. Anyone voting against in the room or abstaining? No? Okay. Thank you. That's fast. All have passed with 95% or so. Resolution number four, appropriation of earnings for 2024 and the dividend, a dividend worth EUR 40 cents per share. You have it.
You have the breakdown of the numbers up on the screen. Let's vote. Please raise your hand if you vote against or if you abstain. No? Thank you. Given the votes received previously and factoring in what has been said here in the room, the motion is passed 99% or more. The dividend will be paid out on the 5th of May, so next week. Resolution number five, maybe Céline Abecassis, the Chairman of the Compensation Committee, can give us a rundown of the fifth and sixth resolution on the say and pay ex post here. Yes, we ask that you approve the information relating to the compensation of the company officers for FY24, so-called say and pay ex post. That is what you have in the governance report. Please raise your hand if you vote against or if you abstain. Thank you.
Given the votes previously received, the motion is passed with 96% in favor. Resolution number six, you are called upon to approve the fixed and variable components of the total compensation for Daniel Harari, Chairman and Chief Executive Officer for FY2024. There again, we're on the ex post basis of say and pay, sorry. As you can see up here, the fixed compensation is EUR 420,000, variable EUR 81,167, which stems from a 19% achievement rate, no extraordinary compensation, and compensation as a director and benefits in kind, which is basically the company car. Grand total for compensation, EUR 562,043 for the Chairman and Chief Executive. Thank you, Céline. Voting now. Anyone against or abstaining? No? Given the votes previously received, the motion is passed with more than 97% in favor. This now brings us to resolution number seven, renewal of the directorship of Céline Abecassis. Daniel, would you say something?
I've known Céline for a very long time. It so happened that she first did an internship at Lectra when she was studying at Nomad Soup, I believe. Then we lost sight of each other, and we opened a chair at ESCP, so the Paris Business School, and Céline was one of the professors there. We were looking a few years ago for an independent director, and her chair was fashion and technology, so sounded about right.
Maybe Céline can introduce herself and tell us what she's done as chairman of the Compensation Committee over the last four years. Yes, thank you.
My name is Céline Abecassis. I have an academic career and also a long career as an independent director.
On the academic side, I'm a graduate of École Normale Supérieure and a PhD of École Polytechnique, after which I joined Lectra at the New York office in 1990-2000. Then I went to Études in London, and then I went back to the university, teaching at Queen Mary in London, and I now also teach at the Católica University in Lisbon and have been for many years. Management is my topic, and indeed, fashion and technology is at the heart of my academic interests, meaning that I'm near enough to the concerns of Lectra. As a non-executive director, I serve here at Lectra, but I also have served in five companies in three countries for a grand total of something like 25 years. I've been at Lectra over the last four years, sitting on the strategic committee and the sustainability committee, and I've chaired the compensation committee.
There have been two major changes over the last few years on compensation. We've revisited the allocation of stock options and revisited the variable share of compensation, factoring in CSR issues and RSC issues.
Thank you. Let's vote on the renewal of Céline's directorship for four years. Anyone against? Anyone abstaining? Thank you. Given the votes previously received, the resolution is passed with more than 97% in favor. Thank you. Thank you. Well done. This now brings us to resolution number eight. This is say on pay still, but ex ante this time. You have the floor. Yes, me still. You're called upon to approve the compensation policy for Mr. Daniel Harari, Chairman and CEO for 2025. The basic principles are unchanged, meaning that the total compensation with 100% achievement would be EUR 840,000, so fixed compensation EUR 420,000, variable EUR 420,000, and that's it.
The Chairman, maybe what has changed is that you have—oh, sorry, is that the next slide? Sorry. Yes, indeed. As concerns the performance criteria, what has changed is the weighting. Last year, we already had strategic criteria and CSR criteria. On the strategic scorecard, we've increased the EBITDA share or relevance, and on CSR, we've increased somewhat the criterion on the improvement of the employee engagement share, and we've added a factor, the climate transition plan. Also, the CSR scorecard can have a negative impact on the strategic scorecard. All of this is not new. We had the same things last year. Yes, the only change is the weighting of the various criteria. Yes, thank you, Céline. Can we now vote? Please show your hand if you are against this 2025 policy. Anyone abstaining? No? Thank you.
Given the votes previously received, the motion is carried 95% or so in favor. Resolution nine, this is the approval of the director's compensation for FY2025, Céline. Yes, me still. You are called upon to approve the director's compensation policy ex ante, so for 2025. The overall maximum amount is EUR 480,000, unchanged, but the cap on individual annual compensation has gone up to EUR 75,000. The fixed share is what you have here, and the variable compensation for the attendance to the various committees, the only change really is the Sustainability Committee, which has increased somewhat because the sustainability report is much more detailed, and we've also mentioned the impact of sustainability on variable compensation. Thank you. Would you please raise your hand if you vote against this policy? Any abstentions? Given the votes previously received, the resolution is carried at more than 99%. Thank you very much.
Céline, which now brings me to the next resolution.
[Foreign language]
Resolution number 10, appointment of Ernst & Young and others, statutory auditors in charge of certifying accounting and financial information, and we're anticipating the end of the terms of KPMG and PwC ending at the AGM in 2026. In anticipation, we put out an RFP for the statutory auditors at the end of last year, 2024. The process was steered by the Audit Committee with the support of the financial division. Following the request for proposals, there were two auditors with staggered terms over 2025-2026. The Audit Committee, the board proposes to appoint Ernst & Young as others, as statutory auditors in charge of certifying financial information for a six-year term ending after the AGM in 2031.
We have the signing company present with us in the room, Jean-Christophe Pernet, the signing of Ernst & Young, whom I'd asked to join us here to briefly introduce himself. Over to you, Mr. Pernet.
Good morning to you all. In a few words, Jean-Christophe Pernet, I'm a partner at EY based at the Paris office. I have experience primarily for listed clients or clients financed by private equity in the tech sector, particularly in SaaS software, as was mentioned earlier. I'd like to thank the group for its trust and confidence, notably the financial division audit committee subject to the AGM vote. We're delighted to join the adventure and to support the group going forward. Lectra has a fascinating activity, and we look forward to kick off the audit. Thank you.
You'll have understood, we'll have three auditors for FY2025, and I suggest we move to the vote. Please raise your hand if you are against the appointment of EY or who wish to abstain. Thank you. Given the votes by correspondence, proxy votes, resolutions carried over 99.99%. Thank you. Next Resolution, 11, authorization for the board to trade in the company share under a liquidity contract. It's a straightforward resolution that we propose ask you to approve every year to buy back for a maximum period of 18 months of our own share. Maximum amount is 2% of the share capital, maximum purchase price per share EUR 60, and a maximum gross amount to be used in this repurchase program of EUR 10 million. Without further ado, let's vote on this resolution.
Those who are against this share buyback program, please raise your hands or who wish to abstain. Thank you. Given the votes by correspondence, proxy votes, resolutions passed over 99% of the vote. We now move to resolutions subject to the extraordinary general meeting. Some may have seen this this morning. We had a special meeting that was held in order to do away with double voting rights that existed up until the day. A large minority of our shareholders, only 0.51% of our shareholders, still held to date double voting rights attached to their registered shares. The meeting held this morning, the special meeting held this morning at 8:30 A.M., approved the deletion of double voting rights. As a reminder, we have encouraged this deletion because there was an inequality of rights between shareholders.
We really pushed the principle of one share, one vote that we see in most companies in Europe in order to promote greater equity within our shareholder base. There will therefore be a correlative change to the company's bylaw. Two articles, Article 6, you have the before and after the change proposal on screen, Article 21 that will also be amended given that we're deleting double voting rights. We will now put this to the vote. Please raise your hand those who vote against. This special meeting approved in its majority approval. I do not know if we have the detail of the vote, but I do not want to make a mistake. It was a 2/3 majority that was required this morning also, and we largely exceeded that 2/3 majority. We will give you the result. It was approved.
It will be published on our website in the coming days, but it was approved. You are asked, because you the shareholders meeting, to approve this deletion, to change the bylaws accordingly. Please raise your hand if you vote against this resolution or if you wish to abstain. Thank you. Given the votes by correspondence, by proxy votes, and in the room, resolution is carried over 99% of the vote. Thank you. Penultimate resolution on screen. This is a change to Article 14, one of the bylaws regarding adoption of resolution by written consultation of board of directors. Thus far, we up until now had the possibility of having this written consultation, but for a limited number of matters.
The law now allows us to extend that to any matter subject to explaining and to detailing the arrangements in the bylaw and a right of opposition to any director who does not want us to consult by written consultation. Let's align our bylaws with these new legal provisions. It is not very legible, but it is on the screen. Let's put it to the vote. Please raise your hand if you vote against this resolution or wish to abstain. Thank you. Given the votes by correspondence, proxy votes in a room, resolution carried by over 99% of the vote. Thank you. Lastly, final resolution of this shareholders meeting, you are asked to grant powers necessary for the performance of formalities subsequent to this general meeting. Primarily, these are formalities of filing and advertising the vote. Votes against or abstentions given the votes by correspondence, via internet in the room.
Resolution is approved by 99% of the vote. Thank you. This brings to an end the voting process. Thank you. Thank you all for your attendance, for your questions. The next financial dates are displayed on screen. Quarterly results, shareholders meeting, next analyst meeting in 2026. This is my 35th AGM, let me say, but not the last one. I feel a young man. Thank you all.