Eurotech : BoD Approves Consolidated Interim Management Statement at 31 March 2015

Amaro (Italy), 14 May 2015

- Consolidated revenues: from €14.21 million to €14.75 million
- Consolidated gross profit: from €7.37 million to €7.22 million
- Consolidated EBITDA: from -€749 thousand to -€1.53 million
- Consolidated EBIT: from -€2.03 million to -€2.89 million
- Consolidated pre-tax result: from -€2.06 million to -€1.98 million
- Group net result: from -€2.40 million to -€1.91 million
- Net cash: €2.28 million
- Shareholders' equity pertaining to the Group: €111.10 million

The Board of Directors of Eurotech S.p.A. examined and approved the results of the first quarter of 2015 today.
The turnover generated in the first quarter of 2015 is basically in line with what was achieved last year, and also with what was forecast in the plan. Group investments continued as planned during the quarter, and this affected operating costs in absolute terms and consequently the result of the period. However, as already pointed out in the previous quarters, investments fall within a strategic course that aims at creating the conditions for an increase in medium-/long-term turnover.
In this situation, and with the hope to break even as soon as possible, while one part of the operational structure continues to look after the positioning of our new Machine to Machine / Internet of things (M2M/IoT) technologies in the market, another part of the operational structure is devoting itself to analysing operating costs and product costs in a perspective of ongoing improvement.
In analysing the figures more in detail, during the first three months of the year Group revenues grew by 3.8% - rising from €14.21 million to €14.75 million - driven by stronger foreign currencies at the time the financial statements were converted. Historically, the performance of the first quarter is not very significant because it is the weakest of the year. However, the prospects in terms of negotiations in the M2M/IoT business line and the positive signals received particularly from the USA area lead us to believe that the direction taken is the right one.
In analysing the performance of the individual geographical areas in which the Group operates, in the first quarter of 2015 the USA area returned to being the one that generated the highest turnover, posting 37.4% of the total (first quarter 2014: 24.0%), followed by the Japanese area with 34.8% (first quarter 2014: 42.2%), while the European area represented the remaining 27.8% (first quarter 2014: 33.8%).
One positive indicator for the quarter is the partial recovery of the gross profit margin, which went up again compared to the year-end figures and came back to more consistent values to get the margins necessary to continue the scheduled investments.
The gross profit margin of the first quarter 2015 amounted to €7.22 million, with a percentage of sales of 49.0%, compared to the percentage of 48.1% at the end of 2014 and of 51.9% of the first quarter 2014.
If it is generally true that the periodic changes in the gross profit margin are also due to the different mix of products sold and to the different contribution to turnover made by the geographic areas where Eurotech operates, gross profit margin performance in this first quarter was also affected by the good control of product costs and is an indicator that the pressure on selling prices, although present, is only moderately noticed.
In analysing operating costs, the investments - mainly in the marketing and sales area and to a lesser extent to support research and development activities - brought about a €839 thousand increase in costs before adjustments to rise from €8.43 million of the first quarter of 2014 to €9.27 million of the first quarter of 2015.

EBITDA totalled -€1.53 million for the first three months of the year, compared with -€749 thousand for 2014.
EBIT came to -€2.89 million in the first quarter of 2015, reflecting the performance of the gross profit margin and operating costs. This result also reflects the effects of the depreciation and amortisation charged to the income statement in the first quarter 2015, which derive from both the operating assets becoming subject to depreciation up to 31 March 2015 and the effects arising from price allocation relating to the acquisition of Dynatem Inc. and Advantet Inc. The effect on EBIT of the PPA amounts in 3M15 was €0.63 million, versus €0.59 million in 3M14.
The pre-tax result in the three months under review was negative for €1.98 million (negative for €2.06 million in the first three months of 2014) and was influenced not only by the considerations made above with regard to the EBIT, but also by a more positive financial management compared to the previous quarter of reference due to the positive differences on exchange rates. The effects of price allocation on the pre-tax result amounted to €0.63 million in 3M15 (€0.59 million in 3M14).
Group net loss was €1.91 million for the quarter, marking an improvement compared to that of €2.40 million in the first three months of 2014), and is in line with the pre-tax loss result just described.
At 31 March 2015 the Group recorded cash and cash equivalents totalling €11.28 million and net cash amounting to €2.28 million.

Pursuant to the provisions set out by CONSOB, it is reported that the Consolidated Interim Management Statement at 31 March 2015 is at the disposal of whoever requests it at the company's registered office. The Statement is also available on the Eurotech website at www.eurotech.com

Pursuant to Art. 154 bis , paragraph 2 of the Italian Consolidated Law on Finance (TUF), the Corporate Financial Reporting Manager of Eurotech S.p.A., Sandro Barazza, declares that the information on accounts disclosed in this press release corresponds to the documentable results, books and accounting records of the company.