Eurotech: 4th quarter 2007 revenues up 66.1% on 2006 at €26.3 million

Amaro (UD), 14 February 2008

• Consolidated revenue: 4th quarter + 66.1% from €15.83 million to €26.31 million; 12 months + 50.8% from
€50.76 million to €76.53 million
• Consolidated EBITDA: 4th quarter from €1.76 million to €2.15 million; 12 months from €2.37 million to €1.78 million
• Consolidated EBIT: 4th quarter from €747 thousand to - €547 thousand; 12 months from €336 million to €-4.148 million
• Consolidated pre-tax results: 4th quarter from €1.87 million to - €1.17 million; 12 months from €1.91 million to -€3.85 million
• Net financial position: €12.54 million

Amaro (UD), 14 February 2008

Today, the Board of Directors of Eurotech S.p.A. examined and approved the results related to the fourth quarter and the entire financial year 2007

These results reported growing revenue for the Eurotech Group, active in research, development, production and marketing of miniaturised (NanoPCs) and high-performance computing capability (HPCs) computers.

The fourth quarter 2007 posted 66.1% year-on-year growth in Group sales, increasing from of €15.83 million to €26.31 million. The large increase reflects the effect arising from acquisition of Applied Data Systems Inc. executed on 8 January 2007 and the Japanese group Advanet, executed on 31 October 2007. Note that the Advanet Group was consolidated on 1 November 2007 and therefore only contributed two months to sales in the quarter, for an amount of €4.3 million.

Group profits in the fourth quarter amounted to €13.29 million (+58.6% on the same period last year) accounting for 50.5% of revenues. Its impact improves, reaching 51.6%, by eliminating the effects of purchase price allocation.

EBITDA in the fourth quarter 2007 was preceded by a plus sign for €2.2 million, with a 8.2% margin on revenues. Fixed operating costs greatly influenced fourth-quarter results. EBITDA before purchase price allocation was €2.45 million with a 9.3 % impact on sales (fourth quarter 2006 reported EBITDA, net of price allocation, of €1.81 million). Thanks to the higher revenue earned, the fourth quarter 2007 reflects the higher absorption of overheads and therefore a better performance of the EBITDA as an absolute value and as a percentage of revenue, with respect to the previous nine months 2007, very close to its performance during the last quarter 2006.

EBIT in the fourth quarter was significantly affected by the negative effects of amortisation due to the price allocation of the Arcom Group, Applied Data Systems Inc. and Advanet Group acquisitions and amounted to - €547 thousand, accounting for - 2.1% of revenue compared to the fourth quarter 2006 which reported EBIT of €747 thousand (accounting for 4.7% of revenue). The negative effects on EBIT due to price allocation pursuant to the Arcom Group, Applied Data Systems Inc. and Advanet Group acquisitions amounted to €318 thousand for the fourth quarter 2006 and €1.774 million for the same period in 2007.

The pre-tax result was negative for €1.177 thousand (it was positive in fourth quarter 2006 for €1.875 million). Stripping off the effects of price allocation, this figure would be positive for €597 thousand (€2.19 million in the fourth quarter 2006).

In the fourth quarter, the net Group result came to - €548 million, compared with €1.379 million in the same period last year. Eliminating the effects of price allocation, this figure would be significantly better, positive for €249 thousand (€1.578 million in the fourth quarter 2006).

Group revenues increased from €50.76 million in the twelve months of 2006 to €76.53 million in the same period of 2007, reporting healthy growth of 50.8% or €25.77 million.

The year reported gross profit with an impact on revenue of 49.7% (50.2% in 2006). Eliminating the effects of price allocation, gross profit would be better, accounting for 50.4% of revenue (51.5% in 2006). The performance of gross profit reflects the business model of Eurotech, based on sale of high value-added products.

EBITDA in the fourth quarter reported a positive result of €1.78 million, accounting for 2,3% of revenue. Once again, net of purchase price allocation EBITDA would be €2.3 million, accounting for 3.0% of revenue. Due to the fixed nature of Company’s operating costs, the performance of EBITDA is strictly related to revenue and gross profit. The results in terms of EBITDA in the year 2007 compared with 2006 were negatively affected by a higher percentage of operating costs on revenue.

EBIT was influenced by the negative effects of amortisation due to price allocation of the Arcom Group, Applied Data Systems Inc. and Advanet Group acquisitions. EBIT increased from - €336 thousand in 2006 to - €4.148 million in 2007. Amortisation arising from price allocation in the year 2007 came to €2.953 million, reporting an increase of €2,2 million compared with the €753 thousand reported in 2006. EBIT before purchase price allocation was negative for €681 thousand (the year 2006 reported a positive value of €1.070 million, accounting for 2.1% of revenue).

Without considering the extraordinary positive effect last year arising from the PTO on Radstone, which accounted for €1.223 million, financial management reported a negative change in absolute values of €657 thousand between 2006 and 2007 chiefly due to the depreciation for € 315 thousand of the associated company Neuricam and due to Euro / USD exchange rates.

Pre-tax income decreased from €1.911 million in the financial year 2006 to - €3.885 million in the year 2007. Stripping off the effects of price allocation, this figure would be better, - €418 thousand in 2007 and + €3.317 million in 2006. In absolute terms, net Group income worsened from €572 thousand in the year 2006 to a loss of €3.233 million in 2007. Eliminating the effects of price allocation, this result would have been significantly better, reporting a negative figure of €1.393 million in 2007 compared with the positive €1.467 million in 2006. Besides reflecting the trend in pre-tax performance, this result was mainly due to the tax burden of the Group’s various companies and to a lesser extent minority interest.

At 31 December 2007, the Group reported a positive net financial position of €12.5 million.





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