Eurotech : board of directors approves consolidated interim financial report at 30 june 2015

• Consolidated revenues: from €31.03 million to €30.17 million
• Consolidated gross profit: from €15.15 million to €15.14 million
• Consolidated EBITDA: from -€1.35 million to -€2.55 million
• Consolidated EBIT: from -€3.92 million to -€5.24 million
• Consolidated pre-tax result: from -€4.17 million to -€4.86 million
• Group net result: from -€4.67 million to -€4.50 million
• Net financial debt: €1.85 million
• Shareholders' equity pertaining to the Group: €104.07 million

The Board of Directors of Eurotech S.p.A. examined and approved the results of the first half of 2015 today.

During the half-year that ended on 30 June 2015, the Group continued the business strategy it undertook last year that is marked by significant investments in the corporate areas considered essential for the future growth of the Group and of its business, as has already been highlighted in the letter to shareholders. More specifically, development of the M2M/IoT platforms is giving important results that give rise to hope for development in the upcoming quarters, especially in terms of new customer acquisition. Several important agreements have been signed, regarding both partnerships with key players in the IoT segment and supply to companies that see Eurotech solutions as technologically innovative elements that allow them to enter the IoT paradigm and to achieve a competitive edge in their respective markets. As regards traditional business, the half-year was influenced by a delay in the start-up of several projects and by a decline in turnover in the Japanese area. These effects, combined with the investments in the operational structure that the Group continues to make, explain the operating results of the half-year under review. Operating costs increased for the investments made to implement the strategy and for future growth, always with a regimen of increased costs controlled and guided by management.

As commented on several times in previous quarters, the objective of the investments made in the operational structure, and in particular in employees, is to strengthen the Group's ability to put the new offer of M2M platforms and IoT solutions on the market while at the same time remaining innovative in the embedded computer segment as well.

These investments are generating the expected results in terms of international brand positioning, creation of a partner ecosystem and development of business opportunities. Given the progress of the strategy's implementation, more tangible results in terms of order portfolio and turnover should emerge in the next quarters.

In view of the order book, also fuelled by orders received in the first half, and the existing contracts Management continue to look positively to the ongoing year, beyond the current situation.
Group revenues in the first six months of 2015 totalled €30.17 million, compared to €31.03 million in the first half of 2014. The USA area developed a higher turnover than that of the same period of reference, the Japanese area faced delays on the orders of several big players, and the European area continues to work on increasing its customer portfolio that is generating interesting business opportunities.

The gross profit margin of the period was 50.2%, in line with management's forecasts at the beginning of the year and higher than what was achieved both at year-end 2014 (48.1%) and in the first half of 2014 (48.8%) Slight fluctuations in gross profit have always been seen in the various periods examined and are a historical element tied to the mix of products sold, which give different margins depending on the type of product, the fields of application and the geographic market outlets.

During the period of reference, operating costs before adjustments rose by 8.6%, equal to €1.51 million, rising from €17.49 million of the first half of 2014 to €19.01 million of the first half of 2015. In addition to being caused by the different translation exchange rate, this increase is the result of the increase in payroll costs due to the investments being made in the structure, and particularly in the M2M/IoT division, to achieve the set goals. In fact, the higher number of Group employees, up from 365 at year-end 2014 to 375 at the end of the first half of 2015, brought about a parallel increase in costs in absolute terms. This rise made an impact on Group EBITDA. Owing to the revenues performance commented on above, gross operating costs rose as a percentage of revenues, from 56.4% in the first half of 2014 to 63.0% in the first half of 2015.

EBITDA in the periods considered went from -€1.35 million in the first half of 2014 to -€2.55 million in the first half of 2015. The difference between the two periods is mainly due to higher operating costs.

EBIT came to -€5.24 million in the first half of 2015, compared with -€3.92 million in the first half of 2014. EBIT as a percentage of revenues was -17.4% in the first half, compared with -12.6% in the same period of 2015. This performance reflects the EBITDA performance described above as well as depreciation and amortisation recognised in the income statement in the first six months of 2015. Depreciation and amortisation derive from both operating assets becoming subject to depreciation in the first half and the non-monetary effects arising from price allocation relating to the acquisitions of Dynatem Inc. and Advanet Inc. The effect on EBIT of the higher values attributed as a result of PPA was €1.27 million the first half of 2015, compared with €1.19 million in the first half of 2014.

Financial management during the first six month of 2015 was affected by the performance of the currencies, to generate a gain of €0.22 million, compared with a loss of €0.30 million in the first six months of 2014. Contributing to this positive performance were the exchange differences due to foreign currency trends, as well as the reduced financial charges owing to the performance of the net financial position. Overall, foreign exchange differences had a positive effect on the period of €470 thousand (compared with a positive effect of €105 thousand in the first half of 2014), while financial management relating to interest had an effect of €254 thousand (€402 thousand in the first half of 2014).

A pre-tax loss of €4.86 million was registered for the first half of 2015, (compared with a loss of €4.17 million in the same period a year previously). This performance was influenced by the factors outlined above. The effect of PPA on the pre-tax result was €1.27 million in the first half of 2015 and €1.19 million in the first half of 2014.

With reference to Group net result, we registered a loss of €4.50 million in the first half of 2015, compared with a net loss of €4.67 million in the first half of 2014. Not only does it reflect the changes in the pre-tax result, but the performance also was caused by the effect of the tax burden on the Group's various units.

At 30 June 2015 the Group had net financial debt of €1.85 million due to the use of cash and cash equivalents to support current operations and to the disbursement regarding investments made in the various business areas.

Working capital, €18.91 million, increased compared to the 31 December 2014 figure of €14.07 million. The change is particularly due to the increased value of inventories for €2.18 million by virtue of the building of the supercomputer prototype for the European project called DEEP (FP7-ICT-287530), coordinated by the German research centre Juelich, which was still undelivered at 30 June 2015.

Pursuant to the provisions set out by CONSOB, it is reported that the Consolidated Interim Financial Report at 30 June 2015 is at the disposal of whoever requests it at the company's registered office. The Report is also available on the Eurotech website at www.eurotech.com (investors section) and on the '1Info' Centralised Storage system at www.1info.it.

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.