Amaro (UD), 27 February 2009
• Consolidated sales of approx. 91.7 million Euros
• Gross margin equal to approx. 54-55% of sales, ahead of the 49.8% achieved in 2007
• Adj.* EBITDA of between 7.6 and 7.8 million Euros, in excess of 8.3% of sales
• Cash flow generated by operating activities above 5 million Euros
• Cash and cash equivalents equal to approx. 38.6 million Euros
• Net financial position of approx. 0.6 million Euros
As far as the data which are the subject of this communication are concerned, please note that the audit process is currently being completed by Reconta Ernst & Young S.p.A., the auditors of Eurotech S.p.A.
The outcome of the above process will be published within the same timeframe as for the approval of the Annual Report.
The Board of Directors of Eurotech S.p.A. (ETH.MI) meeting today has examined the preliminary consolidated data for the year 2008.
During the course of the year just ended, the Eurotech Group achieved consolidated sales of approximately 91.7 million Euros, being an increase of 19.9% compared with the performance in 2007, which generated Euro 76.5 millions. Using constant exchange rates compared with the 12 months of 2007, consolidated sales would have reached Euro 94.1 millions for the 12 months of 2008, representing an overall increase of 23%.
The gross margin was approximately 54-55% of sales, which was significantly ahead of the 49.8% achieved in 2007.
The company strategy to pursue the integration of the various companies within the group and consequent application of synergies and economies of scale between the various subsidiaries, with particular emphasis on the USA, has produced a reduction in operating expenses during the second half of 2008. It is anticipated that the positive effects of this trend will also continue to feed through during the course of 2009.
The Board has examined certain items of non-recurring costs which had an impact on EBITDA in the 2008 accounts.
In particular, following the merger of the American subsidiaries Applied Data Systems (ADS) and Arcom and from the subsequent creation of Eurotech Inc write-downs have been applied in respect of account receivables and of inventories for an amount of approximately 0.7 million Euros.
Furthermore, the Board has agreed a write-down in respect of inventories (finished goods and work in progress) held by the Japanese subsidiary Advanet for an amount of approximately Euro 0.9 millions: these write-downs related to completed and partly completed customised products for which production volumes were in excess of demand.
These non-recurring items had the effect of reducing Group EBITDA for 2008 by an overall total of approximately 1.6 million Euros. Excluding these items and price allocation effects, adjusted EBITDA works out at between 7.6 and 7.8 million Euros, which is in excess of 8.3% of consolidated sales for the year. Including non-recurring items and price allocation effects, EBITDA was between 5.8 e 6.0 million Euros (over 6% of sales), compared with Euro 1.9 millions (2.5% of sales) in 2007.
The Board then acknowledged the affirmed desire of Eurotech's management over recent months no longer to use the ADS and Arcom brands, given that the transformation of the two U.S. subsidiaries with those same names into a single new entity entitled Eurotech Inc. has now been completed. As a result, the Board has approved the decision to write off in the 2008 accounts the entire value of the ADS and Arcom brands, representing an overall value of Euro 10.8 millions. The non-cash effect that this write-off will have on the net profit for 2008 will be approximately Euro 7 millions. The reduction in amortisation charges will already have a positive effect on the 2009 EBIT and on net profits, equating to approximately 2.1 and 1.2 million Euros respectively.
Finally, consolidated results at 31December 2008 shows cash flow generated by operating activities above 5 million Euros, cash and cash equivalents equal to approx. 38.6 million Euros and a net financial position of approx. 0.6 million Euros.
The Board of Directors has expressed its satisfaction with the preliminary results presented, which confirm the activation of intra-group synergies and consequent trend of a significant improvement in margins.
The draft consolidated 2008 accounts will be considered during the next Board meeting scheduled for 16th March 2009.
(*) net of the non-cash effects of Advanet’s price allocation, arising from charging to the income statement the higher value of the inventory identified at the time of acquisition, and of non-recurring costs arising from one-time write-downs applied in respect of account receivables and inventories of American and Japanese subsidiaries.
In accordance with the article 2.2.3, subsection 3, letter a) of the Regulation of Borsa Italiana S.p.A., the Company informs that it will make use of the exemption from publishing the 2008 fourth quarter report, since it will publish the Draft Annual Report and Consolidated Financial Statements within 75 days after the end of 2008, as reported above in the Financial Calendar.
Pursuant to Article 154/2, paragraph 2, of the Italian Consolidated Finance Act (Legislative Decree 58/1998), the financial reporting manager of Eurotech SpA, Sandro Barazza, herewith declares that the financial disclosure contained in this press release corresponds to documentary evidence, corporate books, and accounting records.