EUROTECH S.P.A. EUROTECH: CONSOLIDATED FINANCIAL STATEMENTS AND DRAFT OF SEPARATE FINANCIAL STATEMENTS FOR 2023 APPROVED BY THE BOD
Consolidated revenues in line with previous year, but with much greater weight of Edge AIoT business reaching 41% of total. First margin improved by 240 bps. EBITDA impacted by growth in operating costs to support mid-term strategy.
Amaro (Italy), 19 March 2023
- Consolidated revenues of € 93.8 million (€ 94.3 million as at 31.12.2022, -0.5% at historic exchange rates and +3.6% at constant exchange rates)
- Consolidated gross profit of € 44.4 million and 47.4% of revenues (€ 42.4 million and 45% of revenues as at 31.12.2022)
- Consolidated EBITDA of € 5.3 million (€ 6.3 million as at 31.12.2022)
- Consolidated EBIT of € -2.4 million (€ 0.7 million as at 31.12.2022)
- Group net income of € -3.1 million (€ -1.6 million as at 31.12.2022)
- Net debt of € 20.6 million (€ 14.4 million as at 31.12.2022)
The Board of Directors of Eurotech S.p.A. today examined and approved the consolidated financial statements and draft of separate financial statements for 2022.
Trend of the period
2022 2023 showed consolidated revenues essentially stable year-on-year(-0.5% at historical exchange rates and +3.6% at constant exchange rates).
The Edge AIoT business played a decisive role reaching 41,2% of the total, which is higher than the target of 35% set at the beginning of the year by management. Even excluding InoNet from the consolidation scope, the Edge AIoT business showed significant growth of 19,7% over 2022; including InoNet's contribution, overall year-on-year revenue growth in Edge AIoT rises to over 79,3%.
Difficulties in sourcing electronic components significantly decreased in 2023 compared to the previous year, and were only experienced for some very specific and niche types of components in use in our products in Japan. The improved scenario, actions taken to counter the effects of
the component shortage, and a different product mix led to a 240bps improvement in the first margin over 2022.
The consolidation for all 12 months of InoNet's operating costs produced an increase in total consolidated operating costs, which eroded the first margin recovery and led to an EBITDA that is not yet representative of the group's potential.
On the balance sheet side, on the other hand, it is worth noting the achievement of part of the planned reduction in excess inventory, accumulated during 2022 to counteract the great volatility in the procurement of electronic components, worth 3.7M€ at constant exchange rates and 5.0M€ at historical exchange rates.
Economic performance of the Eurotech Group
Revenues in the twelve months of 2023 were €93.76 million compared to €94.26 million in 2022. Considering that in 2022 InoNet was consolidated only from September to December, the dynamics of revenues net of the German subsidiary would show a decline of 14.7% at constant exchange rates.
Net of inter-company sales, the United States generated 26.5% of total sales (2022: 42.1%),
Japan contributed 28.2% (2022: 30.4%), and the European area accounted for 45.3% (2022: 27.5%).
The Japanese region decreased by 7.6%, but at constant exchange rates would show a growth of 1.8%; the U.S. region suffered more from the effect of destocking and marked a reduction of 37.5%; finally, the European region grew by 63.9% mainly due to the consolidation of InoNet.
Excluding the effect of InoNet, the first margin in 2023 as a percentage of sales stands at 48.9% and compares with a 45.6% margin in 2022. It should be noted that InoNet's first margin improved during 2023 from 36.8% to 42.0% with a growth of 520bps. Combining the two effects, at the consolidated level the first margin improved by 240 bps from 45.0% in 2022 to 47.4% in 2023.
Operating costs before adjustments made for internal increases and net of nonrecurring costs amounted to €42.43 million (45.3% margin) compared to €38.92 million last year (41.3% margin). At constant exchange rates and net of nonrecurring costs, the increase in costs
amounts to €4.65 million, of which €4.38 million is due to higher costs resulting from the effect of the different period of consolidation of InoNet.
EBITDA amounted to €5.28 million (5.6% of revenues), compared to €6.26 million in 2022 (6.6% of revenues). Net of nonrecurring costs, adjusted EBITDA in 2023 was €5.53 million (5.9% of revenues), compared to €7.18 million in 2022 (7.6% of revenues). Non-recurring costs in 2023 were related to the implementation of a new phase of the "run-for-cash" of the legacy embedded business in the U.S., which includes a reduction in the operating structure related to this business, while in 2022 they were related to the acquisition of InoNet.
EBIT, or operating income for the period, was €2.45 million (-2.6% of revenues), compared to €0.65 million in 2022 (0.7% of revenues).
In terms of Group net income, the figure for the twelve months of 2023 was € -3.12 million (-3.3% of revenues), while it was € 1.62 million in the same period of 2022 (-1.7% of revenues).
Balance sheet and financial situation of the Eurotech Group
As of 31 December 2023, the Group had a net financial position with a net debt of €20.6 million, compared to a net debt of € 14.4 million as of 31 December 2022. The change in the net financial position was mainly due to the increase in working capital, which in turn was related to the decrease in trade payables.
The Group's cash and cash equivalents amounted to €11.4 million as of 31 December 2023, while they were €18.1 million at the end of 2022.
Net working capital amounted to €23,9 million as of 31 December 2023, compared to €19.9 million of 31 December 2022. The growth in working capital is mainly related to the combined effect of inventory reduction of €4.97 million and reduction in trade payables of €7.99 million. The ratio of net working capital to sales for the 12 months stands at 25.4%.
Group shareholders' equity amounts to €95.3 million (€106.4 million as of 31 December 2022).
Foreseeable evolution of operations
Visibility given by orders in backlog and customer commitments is limited and is lower for now than it was a year ago during the same period, as a result of customers' current preference for last-minute order release.
Inventory build-up during the component shortage in 2022, followed by destocking in 2023 - also driven by rapidly rising interest rates, which have a direct impact on the cost of inventory holdings - has accelerated the phase-out of the legacy embedded business in the U.S. with the area's largest customer. By virtue of the strategic direction charted, it has not been replaced with other custom projects on embedded products, but rather will be replaced with new customers in the Edge AIoT area. The development of these new projects can already count on a pipeline of opportunities, created also thanks to partnerships with hyperscalers, AWS in primis. We have taken the opportunity to move to the second phase of run-for-cash of the legacy embedded business, especially in the U.S., thus reducing operational costs that are no longer needed.
As for Japan, destocking has occurred but has been partly offset by phase-in of new projects and increased business with some legacy customers in a countercyclical phase.
In contrast, the European region is seeing a wait-and-see behavior of some customers with whom we have secured design-wins of IoT projects, which are consequently entering production at a slower pace than originally expected, especially in the first half of 2024.
It should be noted, however, that in the last four weeks the order-gathering momentum has improved, which leaves room for an improved scenario toward the second half of the year.
Separate Financial Statements of the Parent Company, Eurotech S.p.A.
Revenues of the parent company Eurotech S.p.A. were €22.40 million, compared to €24.08 million in 2022 (delta -7%). Gross operating income for the year amounted to Euro -3.85 million, while it was € -3.81 million in 2022. Net income for the year shows a loss of €23.14 million (in 2022: loss of €4.46 million), mainly due to the adjustment of the value of holdings in the UK (Eurotech Ltd) and the USA (E-Tech USA Inc). For the same reason, the Shareholders' Equity of Eurotech S.p.A. decreases from €136.31 million as of 31 December 2022 to €113.33 million as of 31 December 2023. The Parent Company shows a net financial position with net cash of €2.62 million in 2023, compared to the 2022 figure of €13.41 million net cash.
The Board of Directors will propose to the shareholders' meeting to carry forward the loss for the year of €23.14 million.
***
The Manager in charge of drawing up the corporate accounting documents, Sandro Barazza, hereby certifies, pursuant to paragraph 2 of Article 154-bis of the Consolidated Law on Finance, that the accounting information contained in this press release corresponds to the documented results, books and accounting records of the company.
***
Eurotech
Eurotech (ETH:IM) is a multinational company that designs, develops and delivers Edge Computers and Internet of Things (IoT) solutions complete with services, software and hardware to system integrators and enterprises. By adopting Eurotech's solutions, customers have access to components and software platforms for IoT, Edge Gateways to enable asset monitoring, and high-performance Edge Computer for applications including Artificial Intelligence (Edge AI). To offer more and more complete solutions Eurotech has activated partnerships with leading companies in their field of action, thus creating a global ecosystem that allows it to create "best in class" solutions for the Industrial Internet of Things. More information: www.eurotech.com
Contact
Investor Relations | Corporate Communication |
Andrea Barbaro | Federica Maion |
+39 0433 485411 | Tel. +39 0433 485411 |
andrea.barbaro@eurotech.com | federica.maion@eurotech.com |
ANNEXES - ACCOUNTING SCHEDULES
CONSOLIDATED PROFIT AND LOSS ACCOUNT
(€ '000)
Sales revenue
Cost of material
Gross profit
Services costs
Lease & hire costs
Payroll costs
Other provisions and costs
Other revenues
EBITDA
Depreciation & Amortization
Asset impairment
EBIT
Finance expense
Finance income
Profit before tax
Income tax
Net profit (loss) of continuing operations before minority interest
Minority interest
Group net profit (loss) for period
of which | of which | of which | of which | change (b-a) | ||||||
FY 2023 (b) | non | related | % | FY 2022 (*) (a) | non | related | % | amount | % | |
recurrent | parties | recurrent | parties | |||||||
93,756 | 7 | 100.0% | 94,264 | 8 | 100.0% | (508) | -0.5% | |||
(49,333) | -52.6% | (51,871) | (452) | -55.0% | (2,538) | -4.9% | ||||
44,423 | 47.4% | 42,393 | 45.0% | 2,030 | 4.8% | |||||
(14,653) | (659) | -15.6% | (14,657) | (913) | -15.5% | (4) | 0.0% | |||
(747) | -0.8% | (823) | -0.9% | (76) | -9.2% | |||||
(26,384) | (251) | -28.1% | (23,453) | -24.9% | 2,931 | 12.5% | ||||
(900) | -1.0% | (901) | -1.0% | (1) | -0.1% | |||||
3,541 | 3.8% | 3,705 | 3.9% | (164) | -4.4% | |||||
5,280 | (251) | 5.6% | 6,264 | (913) | 6.6% | (984) | -15.7% | |||
(5,649) | -6.0% | (5,612) | -6.0% | 37 | 0.7% | |||||
(2,080) | - | -2.2% | 0 | 0.0% | 2,080 | n/a | ||||
(2,449) | (251) | -2.6% | 652 | (913) | 0.7% | (3,101) | 475.6% | |||
(2,633) | -2.8% | (2,609) | -2.8% | 24 | 0.9% | |||||
3,420 | 3.6% | 2,647 | 1 | 2.8% | 773 | 29.2% | ||||
(1,662) | (251) | -1.8% | 690 | (913) | 0.7% | (2,352) | 340.9% | |||
(1,456) | -1.6% | (2,309) | -2.4% | (853) | -36.9% | |||||
(3,118) | (251) | -3.3% | (1,619) | (913) | -1.7% | (1,499) | -92.6% | |||
- | 0.0% | - | 0.0% | - | n/a | |||||
(3,118) | (251) | -3.3% | (1,619) | (913) | -1.7% | (1,499) | -92.6% | |||
(*) Restated, due to the final Purchase Price Allocation of InoNet. Effect on Income Statement is Euro 99 thousand at amortization level and Euro 26 thousand at taxes level
REVENUES BREAKDOWN BY CUSTOMER LOCATION
(€' 000)
BREAKDOWN BY GEOGRAPHIC AREA
European Union
FY 2023
38,593
% | FY 2022 | % | % change |
41.2% | 22,480 | 23.8% | 71.7% |
United States
23,657
25.2% | 38,559 | 40.9% | -38.6% |
Japan
26,430
28.2% | 28,447 | 30.2% | -7.1% |
Other
5,076
5.4% | 4,778 | 5.1% | 6.2% |
TOTAL SALES AND SERVICE REVENUES
93,756
100.0% | 94,264 100.0% | -0.5% |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(€'000)
Intangible assets
Property, Plant and equipment
Investments in affiliate companies
Investments in other companies
Deferred tax assets
Medium/long term borrowing allowed to affiliates companies and other companies
Other non-current assets
Total non-current assets
Inventories
Contracts in progress
Trade receivables
Income tax receivables
Other current assets
Other current financial assets
Derivative instruments
Cash & cash equivalents
Total current assets
Total assets
LIABILITIES AND EQUITY
Share capital
Reserves
Share premium reserve
Net profit (loss) for period
Group shareholders' equity
Equity attributable to minority interest
Total shareholders' equity
Medium-/long-term borrowing
Employee benefit obligations
Deferred tax liabilities
Other non-current liabilities
Business combination liabilities
Total non-current liabilities
Trade payables
Trade payables from affiliates companies
Short-term borrowing
Income tax liabilities
Other current liabilities
Total current liabilities
Total liabilities
Total liabilities and equity
at December 31, 2023
85,827
7,185
4
544
4,655
-
502
98,717
21,887
-
19,882
1,206
2,151
143
102
11,428
56,800
155,517
8,879
-
46,842)
136,400 ( 3,118) 95,319
-
95,319
14,979
2,382
3,400
899
740
22,400
11,668
127
16,523
1,779
7,701
37,798
60,198
155,517
of which | at December | of which |
related | related | |
31, 2022 (*) | ||
parties | parties | |
94,573
7,425
-
549
5,301
- | 66 | 66 |
552 | ||
108,466 | ||
26,854 | ||
- | ||
1 | 19,906 | 8 |
749 | ||
2,274 | ||
139 | 3 | |
205 | ||
18,110 | ||
68,237 | ||
176,703 | ||
8,879
-
37,218)
136,400 ( 1,619) 106,442
-
106,442 | ||
15,785 | ||
2,504 | ||
3,978 | ||
999 | ||
900 | ||
24,166 | ||
20 | 19,780 | 117 |
127-
16,256
1,449
8,610
46,095
70,261
176,703
- Restated due to the final Purchase Price Allocation of InoNet. Effect on Shareholders' Equity is Euro 73 thousand
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Actuarial | Exchange | Equity | |||||||||||
Share | Cash flow | gains/(losses) on | rate | Group | attributable | Total | |||||||
Share | Legal | premium | Conversion | Other | hedge | defined benefit | differences | Treasury | Profit (loss) shareholders | to Minority shareholders | |||
(€'000) | capital | reserve | reserve | reserve | reserves | reserve | plans reserve | reserve | shares | for period | ' equity | interest | ' equity |
Balance as at December 31, 2022(*) | 8,879 | 1,776 | 136,400 | 5,998 | ( 49,878) | 205 | ( 445) | 5,829 | ( 703) | ( 1,619) | 106,442 | - | 106,442 |
2022 Result allocation | - | - | - | - | ( 1,619) | - | - | - | - | 1,619 | - | - | - |
Profit (loss) as at December 31, 2023 | - | - | - | - | - | - | - | - | - | ( 3,118) | ( 3,118) | - | ( 3,118) |
Comprehensive other profit (loss): | |||||||||||||
- Hedge transactions | - | - | - | - | ( 103) | - | - | - | - | ( 103) | - | ( 103) | |
- Actuarial gains/(losses) on defined benefit | |||||||||||||
plans for employees | - | - | - | - | - | ( 98) | - | - | ( 98) | - | ( 98) | ||
- Foreign balance sheets conversion difference | - | - | - | ( 5,623) | - | - | - | - | ( 5,623) | - | ( 5,623) | ||
- Exchange differences on equity investments | |||||||||||||
in foreign companies | - | - | - | - | - | - | ( 2,449) | - | - | ( 2,449) | - | ( 2,449) | |
Total Comprehensive result | - | - | - | ( 5,623) | - | ( 103) | ( 98) | ( 2,449) | - | ( 3,118) | ( 11,391) | - | ( 11,391) |
- Performance Share Plan | - | - | - | - | 227 | - | - | - | 41 | - | 268 | - | 268 |
Balance as at December 31, 2023 | 8,879 | 1,776 | 136,400 | 375 | ( 51,270) | 102 | ( 543) | 3,380 | ( 662) | ( 3,118) | 95,319 | - | 95,319 |
(*) Restated due to the final Purchase Price Allocation of InoNet. Effect on Shareholders' Equity is Euro 73 thousand
CONDENSED CASH FLOW STATEMENT
(€'000)
Cash flow generated (used) in operations | A |
Cash flow generated (used) in investment activities | B |
Cash flow generated (absorbed) by financial assets | C |
Net foreign exchange difference | D |
Increases (decreases) in cash & cash equivalents | E=A+B+C+D |
Opening amount in cash & cash equivalents
Cash & cash equivalents at end of period
(*) Restated due to the final Purchase Price Allocation of InoNet.
at December 31, 2023
1,908
- 3,112)
- 2,186)
- 3,292)
- 6,682)
18,110
11,428
at December
31, 2022 (*)
-
1,608) ( 13,396)
1,605 ( 195)
( 13,594)
31,704
18,110
NET FINANCIAL POSITION
20/01/1900 | |
Cash | A |
Cash equivalents | B |
Other current financial assets | C |
Cash equivalent | D=A+B+C |
Current financial debt | E |
Current portion of non-current financial debt | F |
Short-term financial position | G=E+F |
Short-term net financial position | H=G-D |
Non current financial debt | I |
Debt instrument | J |
Trade payables and other non-current payables K | |
Medium-/long-term net financial position | L=I+J+K |
(NET FINANCIAL POSITION) NET DEBT | |
ESMA | M=H+L |
Medium/long term borrowing allowed to | |
affiliates companies and other Group | |
companies | N |
(NET FINANCIAL POSITION) NET DEBT | O=M-N |
at December at December 31, | |
31, 2023 | 2022 |
11,428 | 18,110 |
- | - |
245 | 344 |
11,673 | 18,454 |
- | 2,241 |
16,523 | 14,015 |
16,523 | 16,256 |
4,850 | ( 2,198) |
14,979 | 15,785 |
- | - |
740900
15,719 16,685
20,569 | 14,487 |
- 66
20,569 | 14,421 |
NET WORKING CAPITAL
(€'000)
Inventories
Contracts in progress
Trade receivables
Receivables from affiliates companies
Income tax receivables
Other current assets
Current assets
Trade payables
Trade payables from affiliates companies
Income tax liabilities
Other current liabilities
Current liabilities
Net working capital
31, 2023
(b)
21,887
0
19,882
1
1,206
2,151
45,127
(11,668)
(127)
(1,779)
(7,701)
(21,275)
23,852
31, 2022 | Changes |
(a) | (b-a) |
26,854 | (4,967) |
0 | 0 |
19,906 | (24) |
- 1
749 457
2,274 (123)
49,783 (4,656)
(19,780) 8,112
-
(127)
(1,449) (330)
(8,610) 909
(29,839) 8,564
19,944 3,908
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Disclaimer
Eurotech S.p.A. published this content on 19 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 March 2024 20:54:25 UTC.
