Eurotech: BoD approves Consolidated Half-Year Results at 30 June 2012

Amaro (Italy), 29 August 2012
- Consolidated revenues: from EUR 41.16 million to EUR 42.18 million
- Consolidated gross profit: from EUR 21.19 million to EUR 20.73 million
- Consolidated EBITDA: from EUR -598 thousand to EUR -425 thousand
- Consolidated EBIT: from EUR -4.33 million to EUR -4.20 million
- Consolidated pre-tax profit (loss): from EUR -5.37 million to EUR -4.75 million
- Group net profit (loss): from EUR -5.41 million to EUR -4.45 million
- Net debt: EUR 15.66 million
- Group shareholders’ equity: EUR 132.06 million


Today the Board of Directors of Eurotech S.p.A. reviewed and approved the results for the first half of 2012.
Group revenues registered a slight increase of 2.5% in the first six months of the year, totaling EUR 42.18 million, compared with EUR 41.16 million in the first half of 2011. The first half was affected by the trend in new orders, which were slightly lower than forecast, particularly at the end of 2011, but benefited from the forex effect of the dollar and the yen against the euro. However, because the first half traditionally makes up a different proportion of total annual revenues, and in view of existing opportunities in the pipeline, we expect a positive result at the end of the year and an improvement on the second half compared to 2011.
We will continue to keep a close eye on the global situation, where the US and particularly Japan are showing positive signs – albeit gradually – and where future developments in Europe are hard to predict, due to economic and financial uncertainty in some countries, including Italy. One of the Group's strengths is still its international presence, which allows it to benefit from any signs of recovery in the various economies world-wide and to seize opportunities as they arise.
The gross profit margin came in at 49.1%, slightly less than in the first half of 2011 and at the end of 2011. This reflects a wholly temporary situation resulting from the specific mix of products sold in the second quarter. Management is aiming for a gross profit margin at year-end that tops 50% and is in line with previous periods.
Operating costs as a percentage of revenues, inclusive of adjustments, decreased from 55.6% in the first half of 2011 (EUR 22.9 million) to 53.0% in the first half of 2012 (EUR 22.4 million). This performance had a positive impact on Group EBITDA. The result does not fully reflect the efforts made to cut fixed costs, due to the negative forex trend. When looking at amounts in local currencies, substantial year-on-year savings can be seen, due to the measures taken during 2011 and in the early months of 2012, all of which were designed to increase structural efficiency and thereby lower the activation threshold for operating leverage. Curbing fixed costs and streamlining existing resources remain a priority for management, in order to move towards the profit targets set for the current year.
Due to the traditional distribution of turnover over the quarters, the ratio of fixed costs to turnover was higher in the first half than the forecast level for year-end, assessed over the 12 months.
EBITDA improved in the first half of the year, coming in at EUR -0.4 million in 2012, compared with EUR -0.6 million in 2011.
EBIT registered an improvement in the half-year, reaching EUR -4.20 million, compared with EUR -4.33 million in the first half of 2011. EBIT as a percentage of revenues was affected by turnover levels, coming in at -10.0% compared with -10.5% in the first half of 2011. This result reflects the EBITDA performance, as well as depreciation recognised in the income statement for the reporting period, which was due to both operating assets that became subject to amortization in this period and the effects of purchase price allocation (PPA) relating the acquisitions of Eurotech Inc. (formerly Applied Data Systems Inc.), Dynatem Inc. and the Advanet Group. The effect on EBIT of the higher values attributed at the time of the PPA was EUR 1.88 million the first half of 2012, compared with EUR 1.62 million in the same period of 2011.
The pre-tax result was negative for EUR 4.75 million in the first half of 2012 (compared with a loss of EUR 5.37 million in the first six months of 2011); this performance was affected by the factors described above, as well as positive forex effects due to currency trends. The effect of PPA on the pre-tax result was EUR 1.88 million in the first half of 2012 (EUR 1.62 million in the first half of 2011).
The Group posted a net loss of EUR 4.45 million in the first half of 2012, compared with a net loss of EUR 5.41 million in the first half of 2011, reflecting the trend in the pre-tax result and the current tax burden.
The Group had net debt of EUR 15.66 million at 30 June 2012, an improvement on the EUR 18.34 million posted at 31 March 2012. Operating cash flows were slightly positive in the first half of 2012, a marked improvement on the negative cash flows of EUR 2.04 million registered in the first half of 2011.
Working capital decreased, from EUR 30.14 million at 31 December 2011 to EUR 27.95 million at 30 June 2012. This improvement was due, in particular, to careful control of the duration of receivables and payables and efficient management of inventories, which reduced the value of inventories substantially at the end of the half-year.



Note that, as required by Consob (Italian securities & exchange commission), the Consolidated Half-year Financial Report at 30 June 2012 is available to anyone who requests it from the Company's registered headquarters and from the headquarters of Borsa Italiana S.p.A. The Report is also available on Eurotech’s website, at www.eurotech.com

Pursuant to article154-bis, paragraph 2, of the Italian Consolidated Finance Act, the Financial Reporting Manager of Eurotech SpA, Sandro Barazza, hereby declares that the financial disclosure contained in this press release corresponds to the Company’s documentary evidence, corporate books and accounting records.



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