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
[email protected]	[email protected]

ANNEXES - ACCOUNTING SCHEDULES

ANNEXES - ACCOUNTING SCHEDULES CONSOLIDATED PROFIT AND LOSS ACCOUNT of which non of which of which non of which related change (b-a) FY 2023 (b) % FY 2022 () (a) % related parties amount % (€ '000) recurrent recurrent parties Sales revenue 93,756 7 94,264 8 (508) 100.0% 100.0% -0.5% Cost of material (49,333) (51,871) (452) (2,538) -52.6% -55.0% -4.9% Gross profit 44,423 42,393 2,030 47.4% 45.0% 4.8% Services costs (14,653) (659) (14,657) (913) (4) -15.6% -15.5% 0.0% Lease & hire costs (747) -0.8% (823) -0.9% (76) -9.2% Payroll costs (26,384) (251) (23,453) 2,931 -28.1% -24.9% 12.5% Other provisions and costs (900) (901) (1) -1.0% -1.0% -0.1% Other revenues 3,541 3,705 (164) 3.8% 3.9% -4.4% EBITDA 5,280 (251) 5.6% 6,264 (913) 6.6% (984) -15.7% Depreciation & Amortization (5,649) (5,612) 37 -6.0% -6.0% 0.7% Asset impairment (2,080) - 0 2,080 -2.2% 0.0% n/a EBIT (2,449) (251) 652 (913) (3,101) -2.6% 0.7% 475.6% Finance expense (2,633) -2.8% (2,609) -2.8% 24 0.9% Finance income 3,420 2,647 1 773 3.6% 2.8% 29.2% Profit before tax (1,662) (251) 690 (913) (2,352) -1.8% 0.7% 340.9% Income tax (1,456) (2,309) (853) -1.6% -2.4% -36.9% Net profit (loss) of continuing operations before minority interest (3,118) (251) (1,619) (913) (1,499) -3.3% -1.7% -92.6% Minority interest - 0.0% - 0.0% - n/a Group net profit (loss) for period (3,118) (251) (1,619) (913) (1,499) -3.3% -1.7% -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)
FY 2023 % FY 2022 % % change
BREAKDOWN BY GEOGRAPHIC AREA	European Union	22,480	23.8%
38,593 41.2% 71.7%	United States	38,559	40.9%
23,657 25.2% -38.6%	Japan	28,447	30.2%
26,430 28.2% -7.1%

REVENUES BREAKDOWN BY CUSTOMER LOCATION

	(2,633)		(2,609) -2.8%			-2.8%	24	0.9%


	(1,456)		(2,309) -1.6%			-2.4%	(853)	-36.9%




(*) 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		FY 2023	%	FY 2022	%	% change
European Union		38,593	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%

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

		of which		of which
	at December	related	at December	related
(€'000)	31, 2023	parties	31, 2022 (*)	parties
Intangible assets	85,827		94,573
Property, Plant and equipment	7,185		7,425
Investments in affiliate companies	4		-
Investments in other companies	544		549
Deferred tax assets	4,655		5,301
Medium/long term borrowing allowed to affiliates companies and other companies
	-	-	66	66
Other non-current assets	502		552
Total non-current assets	98,717		108,466
Inventories	21,887		26,854
Contracts in progress	-		-
Trade receivables	19,882	1	19,906	8
Income tax receivables	1,206		749
Other current assets	2,151		2,274
Other current financial assets	143		139	3
Derivative instruments	102		205
Cash & cash equivalents	11,428		18,110
Total current assets	56,800		68,237
Total assets	155,517		176,703


LIABILITIES AND EQUITY
Share capital	8,879		8,879
Reserves	( 46,842)		( 37,218)
Share premium reserve	136,400		136,400
Net profit (loss) for period	( 3,118)		( 1,619)
Group shareholders' equity	95,319		106,442

Equity attributable to minority interest	-		-
Total shareholders' equity	95,319		106,442

Medium-/long-term borrowing	14,979		15,785
Employee benefit obligations
	2,382		2,504
Deferred tax liabilities	3,400		3,978
Other non-current liabilities	899		999
Business combination liabilities	740		900
Total non-current liabilities	22,400		24,166
Trade payables	11,668	20	19,780	117
Trade payables from affiliates companies	127	127	-
Short-term borrowing	16,523		16,256
Income tax liabilities	1,779		1,449
Other current liabilities	7,701		8,610
Total current liabilities	37,798		46,095
Total liabilities	60,198		70,261
Total liabilities and equity	155,517		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

STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY Actuarial gains/(losses) on Exchange rate Equity attributable Share premium Cash flow hedge Group shareholders Share capital Legal reserve Conversion reserve Other reserves defined benefit plans reserve differences reserve Treasury shares Profit (loss) for period to Minority reserve reserve ' equity interest ' equity 8,879 1,776 136,400 5,998 ( 49,878) 205 ( 445) 5,829 ( 703) ( 1,619) 106,442 - - - - - ( 1,619) - - - - 1,619 - - - - - - - - - - - - ( 3,118) ( 3,118) - ( 3,118) - - - - ( 103) - - - - ( 103) - ( 103) - - - - - ( 98) - - ( 98) - ( 98) - - - ( 5,623) - - - - ( 5,623) - ( 5,623) 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













														Total shareholders
	(€'000)
	Balance as at December 31, 2022(*)													106,442
	2022 Result allocation
	Profit (loss) as at December 31, 2023
	Comprehensive other profit (loss):
	- Hedge transactions
	- Actuarial gains/(losses) on defined benefit plans for employees
	- Foreign balance sheets conversion difference
	- Exchange differences on equity investments



	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







CONDENSED CASH FLOW STATEMENT

at December at December
31, 2023 31, 2022 (*) (€'000)

Cash flow generated (used) in operations A 1,908 ( 1,608)
Cash flow generated (used) in investment activities B ( 3,112) ( 13,396)
Cash flow generated (absorbed) by financial assets C ( 2,186) 1,605
Net foreign exchange difference D ( 3,292) ( 195)
Increases (decreases) in cash & cash equivalents E=A+B+C+D ( 6,682) ( 13,594)

CONDENSED CASH FLOW STATEMENT

Comprehensive other profit (loss):



- Exchange differences on equity investments

- 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
(€'000)						CONDENSED CASH FLOW STATEMENT	at December 31, 2023				at December 31, 2022 (*)
Cash flow generated (used) in operations					A		1,908				( 1,608)
Cash flow generated (used) in investment activities					B			( 3,112)			( 13,396)
Cash flow generated (absorbed) by financial assets					C			( 2,186)			1,605
Net foreign exchange difference					D			( 3,292)			( 195)
Increases (decreases) in cash & cash equivalents						E=A+B+C+D		( 6,682)			( 13,594)
Opening amount in cash & cash equivalents							18,110				31,704
Cash & cash equivalents at end of period							11,428				18,110
(*) Restated due to the final Purchase Price Allocation of InoNet.

NET FINANCIAL POSITION

NET FINANCIAL POSITION


		at December 31, 2023	at December 31, 2022
20/01/1900
Cash	A	11,428		18,110
Cash equivalents	B	-		-
Other current financial assets	C	245		344
Cash equivalent	D=A+B+C	11,673		18,454
Current financial debt	E	-		2,241

Current portion of non-current financial debt	F	16,523		14,015
Short-term financial position	G=E+F	16,523		16,256
Short-term net financial position	H=G-D	4,850		( 2,198)

Non current financial debt	I	14,979		15,785
Debt instrument	J	-		-
Trade payables and other non-current payables	K	740		900
Medium-/long-term net financial position	L=I+J+K	15,719		16,685

(NET FINANCIAL POSITION) NET DEBT
ESMA Medium/long term borrowing allowed to	M=H+L	20,569		14,487
affiliates companies and other Group
companies	N	-		66

(NET FINANCIAL POSITION) NET DEBT	O=M-N	20,569		14,421




NET WORKING CAPITAL
	at December	at December
(€'000)	31, 2023	(b)	31, 2022 (a)	Changes (b-a)


Inventories		21,887	26,854	(4,967)
Contracts in progress		0	0	0
Trade receivables		19,882	19,906	(24)
Receivables from affiliates companies		1	0	1
Income tax receivables		1,206	749	457
Other current assets		2,151	2,274	(123)
		45,127	49,783	(4,656)
Current assets

NET WORKING CAPITAL

Medium/long term borrowing allowed to
affiliates companies and other Group



NET WORKING CAPITAL
		at December
	31, 2023
(€'000)	(b)	(a)	(b-a)

Inventories	21,887	26,854	(4,967)
Contracts in progress		0 0	0
Trade receivables	19,882	19,906	(24)
Receivables from affiliates companies		1 0	1
Income tax receivables	1,206	749	457
Other current assets	2,151	2,274	(123)
	45,127	49,783	(4,656)
Current assets
Trade payables	(11,668)	(19,780)	8,112
Trade payables from affiliates companies	(127)	0	(127)

Income tax liabilities	(1,779)	(1,449)	(330)
Other current liabilities	(7,701)	(8,610)	909
Current liabilities	(21,275)	(29,839)	8,564
Net working capital	23,852	19,944	3,908

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Eurotech Earnings Release 2023