EUROTECH: BOARD APPROVES THE DRAFT 2013 STATUTORY AND
CONSOLIDATED FINANCIAL STATEMENTS
As a result of the sale of the US subsidiary Parvus Corp, which was
completed on 1 October 2013 and which generated a net profit of
Euro 21.39 million, the related financials have been recognised in
accordance with IFRS 5 concerning non-current assets held for sale
and discontinued operations. For the purpose of clarity in
presenting the financial performance of the Group, the historical
income statement figures compared with those of 2013 have been
restated to take account of this classification as discontinued
operations. As a result, "continuing operations" means all
operations included within the new scope of consolidation of the
Eurotech Group as of 1 October 2013.
Amaro (Italy), 14 March 2014 - - - - - - - - - - Consolidated
revenues: from EUR 78.74* million to EUR 66.11 million Consolidated
gross profit: from EUR 39.51* million to EUR 32.81 million
Consolidated EBITDA: from EUR 3.66* million to EUR 0.45 million
Consolidated EBIT: from EUR -3.89* million to EUR -11.93 million
Consolidated pre-tax loss from continuing operations: from EUR
4.19* million to EUR 11.39 million Consolidated profit from
discontinued operations: from EUR 2.66* million to EUR 21.39
million Group net profit (loss): from EUR -2.78* million to EUR
8.24 million Net financial position: a net cash balance of EUR
15.11 million, as compared to a net debt balance in 2012 of EUR
11.45 million Group shareholders' equity: EUR 108.10 million
Eurotech S.p.A.: from a net loss of EUR 0.42 million to net profit
of EUR 19.97 million
* figures referring to 2012 have been restated compare to values
originally presented following the application of IFRS 5
The Board of Directors of Eurotech S.p.A has today examined and
approved the draft Statutory Financial Statements and Consolidated
Financial Statements at 31 December 2013, which are to be presented
to the shareholders at their ordinary meeting. Revenue for the
Group settled at EUR 66.11 million in 2013, as compared to EUR
78.74 million in 2012. This decline in revenues was greatly
accentuated by the unfavourable exchange rate between the yen and
the euro in 2013 as compared to 2013. At constant exchange rates,
the difference in revenues between 2012 and 2013 would be 6.7%, as
compared to 16.0% based on the actual figures. The major part of
the decline was caused by the HPC business unit, which accounted
for almost two-thirds of the total difference: the concentration of
sales to a few customers and with large orders make sales of the
SBU HPC highly variable depending on the timing with which the
orders are collected,
EUROTECH SpA Via F. Solari, 3/A 33020 Amaro (UD) - ITALY Tel. +39
0433 485411 Fax. +39 0433 485455 ir@eurotech.com
www.eurotech.com
and this phenomenon was seen in 2013 in a macroscopic way. At
constant exchange rates, the NanoPC SBU showed just a slight
decrease, around 2.5%. Among the geographic areas in which the
Group operates, the major drop was in the US, due in particular to
the postponement of the delivery of two orders belonging to our
transportation vertical market for reasons liked to factors not
controllable by us and related mainly to customers' procedures for
testing and qualification of their own products. The stagnation in
European demand remain present like in 2012, while growth was
posted in Japan (although it cannot be seen in the financials due
to the significant worsening of the yen-euro exchange rate from
2012 to 2013) as a result both of product development and other
investments made by us and of the monetary and financial policies
implement in the country, which helped to stimulate Japanese
industry and promote exports. Gross profit settled at the levels
expected by management and in 2013 came to 49.6%, which is a slight
decline from the margin of 50.2% of the prior year. Margin
variability remains correlated with the mix of products sold, with
products of different types, applications and target markets
providing different margins. Nonetheless, a constant focus on the
purchasing of materials has helped to keep margins under control
and to meet the targets set at the start of the year. This
stability in margins, which is also being seen in orders currently
in progress, also confirms how our customers recognise Eurotech's
ability to provide solutions with high levels of added value.
During the period under review, operating costs before adjustments
for internal increases fell by EUR 3.61 million, going from EUR
38.73 million (or 49.2% of revenues) to EUR 35.12 million (or 53.1%
of revenues). In addition to reflecting the trend in exchange rates
and its impact on the translation of financials in a foreign
currency, this decline shows the cumulative effects of the various
efforts of cost rationalisation in recent years throughout all of
the Group's areas of operations, with a point of equilibrium being
reached in 2013. On the whole, the Group's current structure
remains able to support higher levels of revenues than those
achieved in 2012 and 2013. Earnings before interest, taxes,
depreciation and amortisation, and the measurement of equity
investments (EBITDA) came to EUR 0.45 million, whereas EBITDA
reached EUR 3.66 million in 2012. EBITDA as a margin on 2013
revenues came to 0.7%, as compared to an EBITDA margin of 4.7% in
2012. This difference between the two years is mainly attributable
to the decline in revenues, resulting in lower gross profits, which
were only partially offset by efforts to contain operating
costs.
Following a conservative analysis (through impairment testing) of
the recoverability of investments made in the recent past by the US
business unit Eurotech Inc., management felt it was appropriate to
write down non-current assets by EUR 6.08 million. This action had
a significant impact on earnings before interest and taxes (EBIT),
resulting in an operating loss of EUR 11.93 million, as compared to
an operating loss of EUR 3.89 million in 2012. The non-monetary
impact on EBIT of the price allocation of the acquisitions of
Eurotech Inc. (formerly Applied Data Systems Inc. and Arcom Control
Systems Inc.), Dynatem Inc. and Advanet Inc. and of the
non-recurring items resulting from the aforementioned write-down
totalled EUR 9.23 million in 2013, as compared to an impact of EUR
3.79 million in 2012. The pre-tax net loss from continuing
operations for 2013 came to EUR 11.39 million (whereas the pre-tax
loss for 2012 was EUR 4.19 million). As mentioned, this performance
was largely due to the write-downs recorded and was also influenced
by the finance effect, i.e. the net financial income of EUR 1.20
million due to the trend in exchange rates. The impact on results
before taxes deriving from the price allocation and extraordinary
write-downs was EUR 9.23 million in 2013 and EUR 3.79 million in
2012. Net profit for the Group came to EUR 8.24 million in 2013, as
compared to the net loss of EUR 2.78 million in 2012, and reflects,
in addition to the Group's operating performance, also the combined
effect of the gain realised on the sale of Parvus Corp. and the
write-down of a portion of intangible assets.
Net profit from discontinued operations and assets held for sale
came to EUR 21.39 million and concerns the financial effects of the
sale of the US firm Parvus Corp. The total comprises the gain on
the sale (EUR 21.94 million), the costs directly or indirectly
attributable to the sale (EUR 1.52 million), and the net profit
recorded by Parvus for the nine months in which it was a part of
the Eurotech Group (EUR 0.97 million). The non-monetary effects of
the price allocation and extraordinary write-down described above
on the Group's net profit for 2013 came to EUR 7.99 million (2012:
EUR 2.23 million).
At 31 December 2013, the Group had a net cash balance of EUR 15.11
million, as compared to net debt of EUR 11.45 million in 2012, an
improvement which shows the effect of the cash received on the sale
of Parvus Corp.
Shareholders' equity for the Group, which is the same as
consolidated equity given that there are no minority interests,
totalled EUR 108.10 million (2012: EUR 119.96 million).
Statutory Financial Statements of the Eurotech S.p.A. Parent
Company Revenues for the parent company, Eurotech S.p.A., came to
EUR 14.52 million, as compared to EUR 13.30 million in 2012, for an
increase of 9.16%. Net profit came to EUR 19.97 million, whereas
the company posted a net loss of EUR 0.42 million in 2012. This
performance was positively affected by the sale of Parvus Corp.,
which resulted in a net gain of EUR 26.13 million on the separate
accounts. Shareholders' equity for Eurotech S.p.A. as at 31
December 2013 totalled EUR 108.16 million, as compared to EUR 88.77
million in 2012. For 2013, the parent company had a net cash
balance of EUR 30.97 million, as compared to net debt of EUR 3.79
million in 2012.
Pursuant to Article 154-bis, paragraph 2, of the Italian
Consolidated Finance Act, the financial reporting manager, 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. *** The Board
has also approved the Report on Corporate Governance, which
contains information on the ownership structure pursuant to Article
123-bis of the Consolidated Finance Act and is to be published in
accordance with applicable law. ***
In accordance with the new provisions of Article 154-ter, paragraph
1, of the Consolidated Finance Act, the annual report, which
includes the statutory and consolidated financial statements, the
report on operations, the report on corporate governance, the
declaration of the financial reporting manager, and the reports of
the independent auditor and the board of statutory auditors, is to
be published by no later than 31 March 2014.
THE EUROTECH GROUP Eurotech (ETH:IM) is a global company that
integrates hardware, software and expertise to provide embedded
computing platforms and sub-systems to OEMs, system integrators and
leading corporate customers to enable them to effectively and
efficiently deploy their products and services. Drawing on the
concept of minimalist computing, Eurotech lowers power draw,
minimises physical size and reduces coding complexity to bring
sensors, embedded platforms, subsystems, ready-to-use devices and
high-performance computers to market, specialising in the defence,
transport, logistics, industrial and medical segments. By combining
specific expertise in wireless connectivity as well as
communications protocols, Eurotech architects integrated solutions
that simplify data capture, processing and transfer over global
communications networks. Our customers rely on us to simplify their
access to cutting-edge embedded technologies so they can focus on
their core competencies. For more information on Eurotech, visit
our website at www.eurotech.com.
Company contacts: Investor relations Andrea Barbaro Tel: +39 0433
485411 e-mail: andrea.barbaro@eurotech.com Corporate Press Office
Cristiana della Zonca Tel: +39 0433 485411 e-mail:
cristiana.dellazonca@eurotech.com
ANNEXES FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
OPERATING RESULTS (/ 000) Revenues from sales of products and
services Cost of materials Gr os s profit Service costs Lease &
hire costs Payroll costs Other provisions and other costs Other
revenues Pr of it before depreciation and amortization (EBITDA)
Depreciation & amortisation Asset impairment Ope r at ing
profit Share of associates' profit of equity Finance expense
Finance income Pr of it before taxes Income tax Ne t profit (loss)
of continuing operations before m inor it y interest M inor it y
interest Pr of it (Losses) from discontinued operations Gr oup net
profit (loss) for period Bas e earnings (losses) per share Dilut e
d earnings (losses) per share
F Y 2013
%
F Y 2012 R estated ^
%
66,106 (33,297) 32,809 (12,589) (1,718) (19,292) (1,525) 2,764 449
(6,299) (6,077) ( 11,927) 242 (3,838) 4,136 ( 11,387) (1,768) (
13,155) 0 21,395 8,240 0.238 0.238
100.0% - 50.4% 49.6% - 19.0% - 2.6% - 29.2% - 2.3% 4.2% 0.7% - 9.5%
- 9.2% - 18.0% 0.4% - 5.8% 6.3% - 17.2% - 2.7% - 19.9% 0.0% 32.4%
12.5%
78,739 ( 39,228) 39,511 ( 13,632) ( 2,143) ( 21,044) ( 1,913) 2,883
3,662 ( 7,471) ( 82) ( 3,891) ( 56) ( 2,634) 2,389 ( 4,192) (
1,247) ( 5,439) 0 2,656 ( 2,783) ( 0.079) ( 0.079)
100.0% - 49.8% 50.2% - 17.3% - 2.7% - 26.7% - 2.4% 3.7% 4.7% - 9.5%
- 0.1% - 4.9% - 0.1% - 3.3% 3.0% - 5.3% - 1.6% - 6.9% 0.0% 3.4% -
3.5%
(^) Some amounts shown in this column do not correspond with those
shown in the consolidated financial statements to 31 December 2012,
as they reflect the adjustments made following the adoption of IAS
19R.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
('000)
at Decem b er 31, 2013
at Decem b er 31, 2012 Restated^
ASSETS Intangible assets Pr oper ty , Plant and equipment Inv es
tments in affiliate companies Inv es tments in other companies Def
er r ed tax assets Other non current financial assets Other
non-current assets Tot al non-current assets Inv entor ies Contr ac
ts in progress Tr ade receivables Inc ome tax receivables Other
current assets Other current financial assets Cas h & cash
equivalents Tot al current assets Tot al assets 83,233 3,518 607
248 1,397 2,342 535 91,880 14,156 0 18,673 268 2,404 101 27,995
63,597 155,477 112,853 4,756 275 257 1,083 0 672 119,896 18,282 850
26,641 362 2,170 144 12,116 60,565 180,461
LIABILITIES AND EQUITY Shar e capital Shar e premium reserve Other
reserves Gr oup shareholders' equity Equit y attributable to m inor
it y interest Tot al shareholders' equity Medium- /long- ter m
borrow ing Employ ee benefit obligations Def er r ed tax
liabilities Other non current financial liabilities Other
non-current liabilities Tot al non-current liabilities Tr ade
payables Shor t- ter m borrow ing Der iv ativ e instruments Inc ome
tax liabilities Other current liabilities Tot al current
liabilities Tot al liabilities Tot al liabilities and equity 8,879
136,400 ( 37,180) 108,099 0 108,099 2,729 1,699 6,023 118 884
11,453 14,677 12,319 159 1,657 7,113 35,925 47,378 155,477 8,879
136,400 ( 25,315) 119,964 0 119,964 10,327 1,884 9,486 0 846 22,543
15,084 13,036 344 2,103 7,387 37,954 60,497 180,461
STATEMENT OF CHANGES IN EQUITY
Actuarial Share capital ('000) Balance as at December 31, 2012
Restated^ 2012 Result allocation Profit (loss) as at December 31,
2013 Comprehensive other profit (loss) - Hedge transactions -
Actuarial gains/(losses) on defined benefit plans - Foreign balance
sheets conversion difference - Exchange differences on equity
investments in foreign companies Comprehensive result - Other
changes and transfers ( 18,597) ( 18,597) 21 206 ( 21) ( 46) 206 (
46) 8,879 39 136,400 22,793 ( 42,949) ( 344) Legal reserve Share
premium reserve Conversion reserve Other reserves Cash flow
gains/(losses) hedge reserve on defined benefit plans reserve (
208)
Exchange rate differences reserve Treasury shares Profit (loss) for
period
Group shareholders' equity
Equity attributable to Minority interest
Total shareholders' equity
( 523)
( 1,340)
( 2,783)
119,964
-
119,964
-
-
-
-
( 2,783)
-
-
-
-
2,783
-
-
-
-
-
-
-
-
-
-
-
-
8,240
8,240
-
8,240
( 876) ( 876)
( 792)
8,240
206 ( 46) ( 18,597) ( 876) ( 11,073) ( 792)
-
206 ( 46) ( 18,597) ( 876) ( 11,073) ( 792)
Balance as at December 31, 2013
8,879
39
136,400
4,196
( 45,711)
( 159)
( 254)
( 1,399)
( 2,132)
8,240
108,099
-
108,099
NET FINANCIAL POSITION
at Decem b er 31, ('000) Cas h & cash equivalents Cas h
equivalent Other current financial assets Der iv ativ e instruments
Shor t- ter m borrow ing Bus ines s aggregation liabilities Shor t
- t e r m financial position Shor t - t e r m net financial
position Other non current financial assets Other non current
financial liabilities Medium/long term borrow ing M e dium - /long-
t e r m net financial position A B=A C D E F G=C+D+E+F H=B+G I J K
L=I+J+K 2013 ( 27,995) ( 27,995) ( 101) 159 12,319 0 12,377 (
15,618) ( 2,342) 118 2,729 505
at December 31, 2012 ( 12,116) ( 12,116) ( 144) 344 13,036 0 13,236
1,120 0 0 10,327 10,327
( NET FINANCIAL POSITION) NET DEBT
M =G+L
( 15,113)
11,447
WORKING CAPITAL
('000) 2013 (b ) 2012 (a) C h an g es (b -a)
Inventories Contr ac ts in progress Tr ade receivables Inc ome tax
receivables Other current assets Cur r ent assets Tr ade payables
Inc ome tax liabilities Other current liabilities Cur r ent
liabilities Ne t w or k ing capital
14,156 0 18,673 268 2,404 35,501 ( 14,677) ( 1,657) ( 7,113) (
23,447) 12,054
18,282 850 26,641 362 2,170 48,305 ( 15,084) ( 2,103) ( 7,387) (
24,574) 23,731
( 4,126) ( 850) ( 7,968) ( 94) 234 ( 12,804) 407 446 274 1,127 (
11,677)
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