this document is been translated into english

Consolidated Half-year Financial Report at 30 June 2013 Eurotech ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

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This document is been translated into English for the convenience of readers outside Italy. The original Italian document should be considered the authoritative version.

Date of issue: 29.08.13 This report is available online in the ‘Investors’ section of the website

www.eurotech.com EUROTECH SpA Registered offices: Via Fratelli Solari 3/A, Amaro (Udine), Italy Paid-in share capital: EUR 8,878,946 fully paid in Tax code and Udine Company Register no.: C.F. 01791330309


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CONTENTS

EUROTECH GROUP .........................................................................................................................5

Corporate information .....................................................................................................................5

Information for shareholders ..........................................................................................................6

Management report ..........................................................................................................................7

Introduction ..................................................................................................................................7

Performance highlights .................................................................................................................7

The Eurotech Group ...................................................................................................................10

Balance sheet.............................................................................................................................18

Investments and research and development ..............................................................................20

Competitive scenario, outlook and future growth strategy ..........................................................21

Treasury shares of the Parent Company owned by the Parent Company or subsidiaries .........21

Disclosure of sovereign exposure ..............................................................................................21

Events after the reporting period ................................................................................................21

Condensed consolidated half-year financial statements at 30 June 2013 ...............................22

Consolidated statement of financial position ..............................................................................22

Consolidated income statement .................................................................................................23

Consolidated statement of comprehensive income ....................................................................24

Statement of changes in shareholders’ equity............................................................................25

Cash Flow Statement .................................................................................................................26

Explanatory notes to financial statements ..................................................................................27

A – Corporate information ..........................................................................................................27

B – Reporting policies and IFRS compliance .............................................................................27

C – Scope of consolidation .........................................................................................................29

D – Segment reporting ...............................................................................................................31

E – Breakdown of main balance sheet items .............................................................................33

1 – Intangible assets ..........................................................................................................33

2 – Property, plant and equipment .....................................................................................35

3 – Investments in affiliates and other companies .............................................................36

4 - Inventories ....................................................................................................................37

5 – Work in progress ..........................................................................................................38

6 – Trade receivables ........................................................................................................38

7 – Tax receivables and payables .....................................................................................39

8 – Other current assets ....................................................................................................39

9 – Current financial assets ...............................................................................................40

10 – Cash & cash equivalents ...........................................................................................40

11 – Net financial position ..................................................................................................41

12 – Equity .........................................................................................................................41

13 – Basic and diluted earnings per share .........................................................................42

14 - Borrowings ..................................................................................................................43

15 - Employee benefits ......................................................................................................44

16 - Trade payables ...........................................................................................................45

17 – Other current liabilities ...............................................................................................45

F - Breakdown of key income statement items ...........................................................................46

18 – Costs of raw & auxiliary materials and consumables used ........................................46

19 – Other operating costs net of cost adjustments ...........................................................47

20 – Service costs..............................................................................................................47

21 – Payroll costs...............................................................................................................48

22 – Cost adjustments for internally generated non-current assets ...................................48

23 – Other revenues ..........................................................................................................49

24 – Amortisation, depreciation and write-downs ..............................................................49

25 – Financial charges and income ...................................................................................49

26 – Income tax for the period ...........................................................................................50

G – Other information .................................................................................................................51

27 – Related-party transactions .........................................................................................51


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28 – Financial risk management: objectives and criteria ...................................................53

29 – Financial and derivative instruments ..........................................................................54

30 – Events after the reporting period ...............................................................................55

31 – IFRS 5 - Non-current assets held for sale and discontinued operations ...................55

32 – Business seasonality .................................................................................................57

Certification of the condensed consolidated half-year financial statements ...........................58

Indipendent auditors’s report .......................................................................................................59


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EUROTECH GROUP

Corporate information

Board of Directors

Chairman Roberto Siagri

Vice Chairman Giampietro Tecchiolli

Director Sandro Barazza 1 2

Director Giovanni Bertolone 2

Director Giancarlo Grasso 2

Director Chiara Mio 2 3 4

Director Maria Cristina Pedicchio 2 3 4

Director Cesare Pizzul 2 3 4 5

Director Giovanni Soccodato 2

The Board of Directors currently in office was appointed by shareholders at the Annual General Meeting of 28 April 2011, and will remain in office until approval of the financial statements for the year ending 31 December 2013.

Board of Statutory Auditors

Chairman Claudio Siciliotti

Statutory Auditor Michela Cignolini

Statutory Auditor Giuseppe Pingaro

Substitute Auditor Lorenzo Ginisio

Substitute Auditor Michele Testa

The Board of Statutory Auditors currently in office was appointed by shareholders at the Annual General Meeting of 28 April 2011, and will remain in office until the approval of the financial statements for the year ending 31 December 2013.

Independent auditor

Reconta Ernst & Young SpA

The independent auditor was appointed for the three-year period 2005-2007 by shareholders at the Annual General Meeting of 21 July 2005. This term was extended by shareholders for the period 2008-2013 at the Annual General Meeting on 7 May 2007.

Corporate name and registered offices of the Parent Company

Eurotech S.p.A. Via Fratelli Solari 3/A 33020 Amaro (UD), Italy Udine Companies Register number 01791330309

1 Corporate Financial Reporting Manager as from 29 May 2008. 2 Non-executive Directors. 3 Member of the Remuneration Committee, the Internal Control Committee and the Committee for Related Party Transactions. 4 Independent Directors pursuant to the Corporate Governance Code issued by the Italian Corporate Governance Committee for Listed Companies.

Consolidated Half-year Financial Report at 30 June 2013___________________________________________________________________________________________________________________________________________________________

Information for shareholde

The ordinary shares of Eurotech S.p.A., the Parent Company of the Eurotech Group, have been listed in the STAR segment of the Milan stock market since 30 November 2005. Share capital of Eurotech S.p.A. at 30.06.13Share capital Number of ordinary shares (without nominal unit value) Number of savings shares Number of Eurotech S.p.A. treasury sharesStock market capitalisation (based on the share’s Stock market capitalisation (based on the share Performance of Eurotech S.p.A. shares Absolute performance of EUROTECH S.p.A. shares01.01.2013 – 30.06.2013

The line graph shows the share’s performance based on daily reference prices

The candle chart shows the share’s daily maximum and minimum prices

year Financial Report at 30 June 2013 __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

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Information for shareholde rs

The ordinary shares of Eurotech S.p.A., the Parent Company of the Eurotech Group, have been listed in the STAR segment of the Milan stock market since 30 November 2005.

Share capital of Eurotech S.p.A. at 30.06.13

Number of ordinary shares (without nominal unit value)

Number of Eurotech S.p.A. treasury shares Stock market capitalisation (based on the share’s average price in December 2013) ock market capitalisation (based on the share’s reference price at 30.06.13)

Performance of Eurotech S.p.A. shares

Absolute performance of EUROTECH S.p.A. shares

Eurotech _____________________________________________________________________________________________________________

The ordinary shares of Eurotech S.p.A., the Parent Company of the Eurotech Group, have been listed in the STAR

€8,878,946.00

35,515,784 -

420,140 €42 million €42 million


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Management report

Introduction The annual consolidated financial statements for the Eurotech Group are prepared in compliance with the international financial reporting standards (IFRSs) issued by the International Accounting Standards Board (IASB) and adopted by the European Commission as per the procedure indicated in Article 6 of the EC Regulation no. 1606/2002 of the European Parliament and European Council dated 19 July 2002. This consolidated half-year financial report for the six months to 30 June 2013 was prepared in accordance with IAS 34 - Interim Financial Reporting and Article 154-ter of the Consolidated Finance Law (“TUF”). This consolidated half-year financial report does not include all the information required for the preparation of the consolidated annual financial statements, and must therefore be read in conjunction with the consolidated annual financial statements at 31 December 2012. Unless otherwise stated, data are expressed in thousands of euro (€ ‘000).

Performance highlights Income statement highlights

(^) Some of the amounts shown in this column do not correspond to those shown in the consolidated half-year financial statements at 30 June 2012, since they reflect the adjustments described in Note 15.

(€'000) 1H 2013 % 1H 2012

Restated^ %

OPERATING RESULTS

SALES REVENUES 33,058 100.0% 42,176 100.0%

GROSS PROFIT MARGIN 17,399 52.6% 20,728 49.1%

EBITDA (1,948) -5.9% (425) -1.0%

EBIT (5,378) -16.3% (4,202) -10.0%

PROFIT (LOSS) BEFORE TAXES (4,563) -13.8% (4,753) -11.3%

GROUP NET PROFIT (LOSS) FOR THE PERIOD (4,560) -13.8% (4,448) -10.5%


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Balance sheet and financial highlights

(*) Non-current non-financial assets, plus working capital, less non-current non-financial liabilities. (^) Some of the amounts shown in this column do not correspond to those shown in the consolidated financial statements at 31 December 2012, since they reflect the adjustments described in Note 15.

Employee headcount

PATRIMONIAL DATES

at June 30,

2013

at December

31, 2012

Restated^

Non-current assets 108,755 119,896

- of w hich net intangible assets 102,448 112,853

- of w hich net tangible assets 4,077 4,756

Current assets 49,355 60,565

TOTAL ASSETS 158,110 180,461

Group shareholders' equity 105,119 119,952

Minority interest 0 0

Non-current liabilities 17,787 22,555

Current liabilities 35,204 37,954

TOTAL LIABILITIES AND EQUITY 158,110 180,461

€'000

at June 30,

2013

at December

31, 2012

Restated^

NET FINANCIAL POSITION 11,885 11,447

NET WORKING CAPITAL 18,868 23,731

NET INVESTED CAPITAL* 117,004 131,399

CASH FLOW DATACash f low generated (used) in operations 2,147 7,432Cash f low generated (used) in investment activities (1,125) (2,466)Cash f low generated (absorbed) by f inancial assets (1,995) (4,516)

Net foreign exchange difference (1,530) (1,930)

TOTAL CASH FLOW (2,503) (1,480)

at June 30,

2013

at December 31,

2012

at June 30,

2012

NUMBER OF EMPLOYEES 416 420 429


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Revenues by business line

The business lines covered by the Group are ‘NanoPCs’ and ‘HPCs’ (High Performance Computers). The NanoPC line comprises miniaturised electronic modules and systems for the transport, logistics, defence, security, medical and industrial sectors, while the HPC line consists of highly energy-efficient supercomputers, currently targeting universities, research institutes and computing centres. Volumes in the HPC business line are affected by the cyclicality of the purchasing model of our clients operating in this sector. In view of the clear predominance of the NanoPC business line, information broken down by region has been provided only for this line, in relation to the Group's various units and based on the way in which these are monitored by senior management. There are no significant transactions between the business lines. The Group’s geographical regions in the NanoPC line are defined according to the location of Group assets and transactions. These regions are currently: Europe, North America and Asia. Revenues of the NanoPC line by business region

(€'000)

1H 2013 1H 2012 % YoY

Change FY 2012 1H 2013 1H 2012

% YoY

Change FY 2012 1H 2013 1H 2012

% YoY

Change FY 2012

Sales revenues 32,891 41,056 -19.9% 90,255 167 1,120 -85.1% 3,372 33,058 42,176 -21.6% 93,627

NanoPC High Performance Computer Total

Nano PC; 99,5%

HPC;

0,5%

1H 2013

Nano PC; 96,4%

HPC;

3,6%

FY 2012

Nano PC; 97,3%

HPC;

2,7%

1H 2012

(€' 000)

1H 2013 1H 2012% YoY Change




1H 2013 1H 2012 % YoY Change

Third party Sales 13,779 18,325 8,922 9,597 10,190 13,134 0 0 32,891 41,056

Infra-sector Sales 400 1,124 2,424 3,321 173 38 ( 2,997) ( 4,483) 0 0

Total Sales revenues 14,179 19,449 -27.1% 11,346 12,918 -12.2% 10,363 13,172 -21.3% ( 2,997) ( 4,483) 33.1% 32,891 41,056 -19.9%

North America Europe Asia Correct ion, reversal and elimination Total


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Performance

The Eurotech Group Eurotech is a global company with a strong international focus, which generates sales on three continents. It’s a Group that has operating locations in Europe, North America and Asia, led and coordinated by the headquarters in Italy. The technological paradigm followed by Eurotech is ‘pervasive computing’ or ‘ubiquitous computing’. The pervasive concept combines three key factors: (1) miniaturisation of ‘smart’ devices, i.e. devices capable of processing information; (2) their spread in the real world – inside buildings and equipment, on board vehicles, worn by people, and disseminated in the environment; and (3) their ability to connect with each other in a network and communicating. In this perspective, Eurotech creates miniaturised computers for special uses (NanoPCs) and supercomputers with high computing capacity and high energy efficiency (HPCs). NanoPCs and HPCs are the two major classes of devices that, by connecting to and cooperating with each other, form the pervasive computing structure previously known as the ‘pervasive computing grid’, which today we call the ‘Internet of Things’.

In the NanoPC segment, the Group’s offering differs according to the positions of the various products in the value stack. The NanoPC is typically a miniature computer that can take the form of:

-10

-5

0

5

10

15

20

25

30

35

40

45

1H 2013 1H 2012 Restated^

SALES REVENUES

GROSS PROFIT MARGINEBITDA

EBIT

PROFIT (LOSS) BEFORE TAXES


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- an embedded electronic system (i.e. inserted within a device or a system), often used as a component of OEM products;

- an application-ready subsystem or platform, used as elements of integrated systems; - a ready-to-use device employed in a greater variety of application settings, often as support for the provision of

value-added services. All these NanoPCs have wireline or wireless communication channels to ensure their interconnection. It is this combination of computing and communication capabilities that makes Eurotech’s NanoPCs key elements of the pervasive scenario that the company wants to create. The Group’s NanoPC offering is used in many types of applications, both conventional and emerging. Eurotech is most active in the transport, defence, security, logistics, industrial and medical sectors. The feature common to many of our customers in all these sectors is they are seeking not only a supplier but also a centre of technological competence – and they often see in Eurotech a partner for innovating their products and their way of doing business. They choose Eurotech because they want to minimise the total cost of ownership of their projects or systems. They want to reduce their time-to-market and focus on their core businesses. They often need solutions for harsh operating conditions and for mission-critical applications, or supplies assured for long periods. In the HPC segment, Eurotech designs and creates green supercomputers with huge computing capacity, occupying little space and highly energy efficient, created via mass and parallel connection of high-performance miniaturised computers. These supercomputers – in the past aimed at cutting-edge research institutes, computing centres, and universities – are turning out to be indispensable in advanced sectors such as nanotechnology, biotechnology and cyber security. We also expect them to have a significant impact on the medical and industrial fields in the near future. While we continue to improve our consolidated NanoPC and HPC offering, we are increasingly tackling the challenge of creating end-to-end solutions to seamlessly interconnect distributed smart objects and transport valuable data between machines, leveraging on the Cloud IT infrastructure. Any object that is equipped with a small interconnected computer can generate a flow of data and has the potential to become a web-monitored asset, whether it be a vending machine, a bundle of bank notes, an agricultural vehicle or a level crossing. But to create the ‘Internet of Things’, the interface between the real and the digital worlds, between sensors and the web, and between devices and the Cloud, have to be managed. At Eurotech, we know how to process significant data from applications in the real world, transport them in the Cloud and make them usable in business processes and applications. Today, our systems and devices can be easily integrated within a Cloud infrastructure, whether public or private, via our Everywhere Cloud software platform, which rapidly connects smart objects to build distributed systems for M2M solutions. Thanks to our platform, our partners and customers can create flexible solutions that support value-added service provision and asset monitoring systems in a whole range of operating contexts. At 30 June 2013 the Eurotech Group consisted of the following companies:

Company name Business Share capital Group % ownership

Parent company

Eurotech S.p.A. Operates in the NanoPC segment with a primary focus on the Italian market and the HPC market at global level. In organisational terms, it acts as a coordinating holding company at corporate level

Euro 8,878,946

Subsidiaries and companies consolidated on a line-by-line basis

Dynatem Inc. Operates in the North American NanoPC market

USD 1,000 100.00%

ETH Devices S.r.o. Operates in the eastern European market in the NanoPC segment, chiefly in handheld devices

Euro 10,000 100.00%

Eurotech Inc. Operates in the North American NanoPC market, with a focus on the industrial, medical and transport sectors

USD 26,500,000 100.00%

Eurotech Ltd. Operates in the NanoPC segment and is active primarily in the UK

GBP 33,333 100.00%


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E-Tech USA Inc. Holding company that controls 100% of Eurotech Inc. and Dynatem Inc.

USD 8,000,000 100.00%

Eurotech France S.A.S. Operates in the French NanoPC market

Euro 795,522 100.00%

I.P.S. Sistemi Programmabili S.r.l.

Operates in the NanoPC segment under the IPS brand and also operates in the high-tech security sector under the ETH Security brand

Euro 51,480 100.00%

Parvus Corp. Operates in the North American NanoPC market, chiefly in the defence sector

USD 119,243 100.00%

Saee S.r.l. Active in technological solutions in the field of sensor networks and wireless applications (2)

Euro 15,500 100.00%

EthLab S.r.l. Handles research and development on the Group’s behalf. Euro 115,000 99.99%

Advanet Inc. Operates in the Japanese NanoPC market

JPY 72,440,000 90.00% (1)

(1) For consolidation purposes it is regarded as wholly owned, since the company holds the remaining 10% in the form of treasury shares. (2) Company placed in liquidation as of 9 August 2013.


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Operating performance

(*) Gross profit = difference between revenues from sale of products and services and consumption of raw materials. (**) EBITDA, an intermediate figure, is earnings before amortisation, depreciation and impairment of non-current assets, financial income and

expenses, the valuations of affiliates at equity and of income taxes for the period. This is a measure used by the Group to monitor and assess its operating performance. Since the composition of EBITDA is not regulated by the reference accounting standards, the determination criteria applied by the Group may not be the same as that used by others and may therefore not be comparable.

(***) EBIT, or earnings before financial income and expenses, the valuations of affiliates at equity and income taxes for the period. (^) Some of the amounts shown in this column do not correspond to those shown in the consolidated half-year financial statements at 30 June 2012, since they reflect the adjustments described in Note 15. The six months ended 30 June 2013 continued to be characterised, on the one hand, by a lower turnover compared with historical levels and, on the other hand, by a further reduction in operating costs. The Group’s main objective in this financial year, which can be summed up as breaking even, remains valid even in view of the current situation. The improved operating efficiency on the one hand and the order book as at the end of July 2013 indicates that the breakeven target can still be achieved by the end of the year. In fact, taking into account the combined value of sales for the first half of the year and the order backlog as at the 1st July 2013 for the second, this value is 11.1% higher than that of previous year, using the same exchange rates. With reference to the total multi-year order backlog at the end of July, it exceeded € 60 million for the first time in Eurotech’s history. This figure excludes the contract for USD 60 million signed with SAIC and which will be included in the portfolio as the supply orders are released. This higher concentration of sales in the second half is in line with what happened in almost all prior years and with a peak in the last quarter. This year the order book shows an even bigger concentration than usual in the last quarter of 2013, this concentration being even more marked in the American and Japanese areas. Group revenues came to €33.06 million in the first half of 2013, compared with €42.18 million in the first half of 2012. Turnover was strongly influenced by the requirements of customers in North America and Japan, who requested specific scheduling of deliveries towards the second half of the year. This phenomenon, as well as persistent gloom in the European economy, had a negative effect on the Group’s operating and financial results. The weakness of the yen and the dollar by comparison with last year also widened the gap compared with 2012. On the other hand, new orders are in line with expectations: the order book and existing contracts allow us to take a positive view of the year in progress beyond the results for the first half alone, which certainly fall short of our normal performance and our original forecasts. To date, no circumstances or events have arisen that could cause any significant revision of sales forecasts for full-year 2013.

(€'000) 1H 2013 % 1H 2012

Restated^ %

OPERATING RESULTS

SALES REVENUES 33,058 100.0% 42,176 100.0%

GROSS PROFIT MARGIN (*) 17,399 52.6% 20,728 49.1%

EBITDA (***) (1,948) -5.9% (425) -1.0%

EBIT (****) (5,378) -16.3% (4,202) -10.0%

PROFIT (LOSS) BEFORE TAXES (4,563) -13.8% (4,753) -11.3%

GROUP NET PROFIT (LOSS) FOR THE PERIOD (4,560) -13.8% (4,448) -10.5%


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The Company’s managers regard the existing targets as achievable, due to cost reductions and the substantial number of deliveries scheduled for the final quarter of the year. This is a point on which managers are closely focused, and they are working to ensure that deadlines are met in terms of production and on the part of customers, to ensure that no turnover slides into next year due to organisational problems. Generally speaking, the US market is showing positive signs in terms of orders, despite a deficiency in turnover. In Japan, the yen is likely to weaken further against the other currencies, and this should give a medium-term boost to our customers in this region, which depends heavily on exports as well as the domestic market. In the short term, however, the most obvious effect is reduced turnover in this region when translated to euro. Lastly, Europe is still in an uncertain situation, with little visibility on future development due to the turbulence in the eurozone countries. This performance is confirmed by the breakdown of turnover generated in the three regions, as described later in this document. In view of the global situation just described, the Eurotech Group has continued to invest in products and increasing the efficiency of its structures, so that it can be ready, not only in terms of technology but also structurally, to respond to market need for innovation in each geographical region. The necessary curb on spending – without, however, a withdrawal of substantial investment to support Group competitiveness – counteracted the lower turnover registered in the first half-year and limited its effects on the operating margin. Before commenting on the income statement figures in more detail, we must point out that some of them reflect the effects of the recognition in the accounts of purchase price allocation (PPA)A relating to the business combinations of Applied Data Systems Inc. (now Eurotech Inc.), Dynatem Inc. and Advanet Inc.. Actual results with and without the effect of purchase price allocation are summarised below: - rather than -€5.34 million, the EBIT figure would have been -€3.76 million; - rather than -€4.56 million, the pre-tax result would have been -€2.94 million; - rather than -€4.56 million, the Group net result would have been -€3.58 million. Gross profit for the period was certainly a positive result, being higher, as a percentage of turnover, than in the first half of 2012 and at the end of 2012, at 52.6%. This performance was influenced by the specific mix of products sold, and helped to mitigate the effect of reduced turnover on the result. Operating costs before adjustments decreased by €2.0 million in the period under review, from €22.4 million in the first half of 2012 to €20.4 million in the first half of 2013. This cost reduction had a positive effect on Group EBITDA and partly balanced out the negative effect of lower turnover. Due to the revenues performance previously described, gross operating costs as a percentage of revenues increased from 53.0% in the first half 2012 to 61.7% in the first half 2013, representing an improvement on the first quarter of 2013 (65.6%). As in the case of revenues, the reduced operating costs were partly due to the different foreign exchange ratio used to convert the financial statements of foreign companies. However, the reduction in costs was also due, as in previous quarters, to measures taken by managers to make the Group's structure more efficient and to lower the activation threshold for operating leverage. Further benefits are expected during the financial year, based on the lastest actions launched at the end of 2012 and during this year. By virtue of the usual distribution of turnover between the quarters, which is set to be even more unbalanced in the second half of this year, fixed costs as a percentage of turnover are expected to be substantially lower over 12 months. Curbing fixed costs and rationalising existing resources are still a management priority this year, in order to achieve the profit targets set at the start of the year. Operating costs were also affected by a significant, non-recurring allocation to doubtful debt provision of €572 thousand in the North American region.

A More specifically, the effects of the recognition in the accounts of PPA relating to the business combinations of Applied Data Systems Inc., Dynatem Inc. and Advanet Inc. can be summed up as follows:

• Depreciation, amortisation and impairment: €1.62 million (€1.88 million at 30 June 2012), equal to the higher amortisation

charged to the higher values attributed to intangible assets (particularly customer relationships).

• Lower income taxes: €0.64 million (€0.77 million at 30 June 2012) resulting from the tax effect on adjustments made.


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EBITDA came in at -€1.9 million in the first half of 2013, compared with -€0.4 million in the first half of 2012. EBITDA as a percentage of revenues went from -1.0% in the first half of 2012 to -5.9% in the first half of 2013. The difference between the two periods is mainly due to reduced turnover, partly offset by more positive gross profit and reduced operating costs. EBITDA forecasts for full-year 2013 remain positive. EBIT came to -€5.38 million in the first half of 2013, compared with -€4.20 million in the first half of 2012. EBIT as a percentage of revenues was -16.3% in the first half, compared with -10.0% in the same period of 2012. 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 2013. 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 Eurotech Inc. (formerly Applied Data Systems Inc.), Dynatem Inc. and Advanet Inc.. The effect on EBIT of the higher values attributed as a result of PPA was €1.62 million the first half of 2013, compared with €1.88 million in the first half of 2012. Financial management generated income of €0.79 million, compared with a loss of €0.52 million in the first six months of 2012. It was mainly affected by foreign exchange differences due to foreign currency trends, as well as the net financial position performance and reduced financial charges. Overall, foreign exchange differences had a positive effect on the period of €1,248 thousand (compared with an effect of €92 thousand in the first half of 2012), while financial management relating to interest had an effect of €462 thousand (€611 thousand in the first half of 2012). A pre-tax loss of €4.56 million was registered for the first half of 2013, (compared with a loss of €4.75 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 €1.62 million in the first half of 2013 and €1.88 million in the first half of 2012. The Group registered a net loss of €4.56 million in the first half of 2013, compared with a net loss of €4.45 million in the same period last year. This performance not only reflects the pre-tax result, but is also due to the tax burden on the Group’s various units. Total PPA effects on the Group net result in the first half of 2013 amounted to €0.98 million (first half of 2012: €1.10 million). As indicated in the explanatory notes to the condensed consolidated half-year financial statements (Note D), the Group discloses segment information based on the product sectors in which it develops its activity (NanoPCs and HPCs) and, exclusively in NanoPCs, based on the regions in which the various Group companies operate and are currently monitored. These are defined by the location of goods and operations carried out by individual Group companies. They are: Europe, North America and Asia. More specifically, below we have broken down the trend in revenues and margins in the individual business areas and the changes occurring in the reporting period.

(€'000)

1H 2013 1H 2012 %YoY Chg 1H 2013 1H 2012 %YoY Chg 1H 2013 1H 2012 %YoY Chg

Sales and service revenue by segment

Sales and service revenue by segment 32,891 41,056 -19.9% 167 1,120 -85.1% 33,058 42,176 -21.6%

Ebitda by segment (1,461) (134) 990.3% (487) (291) -67.4% (1,948) (425) 358.4%

Ebit by segment (4,763) (3,596) -32.5% (615) (606) -1.5% (5,378) (4,202) -28.0%

Total EBIT (5,378) (4,202) -28.0%

Net f inance income (expense) 786 (519) 251.4%

Shares of associates' prof it (loss) 29 (32) 29 (32) -190.6%

Profit before tax of continuing operations (4,563) (4,753) 4.0%

Income tax 3 305 99.0%

Net profit (loss) (4,560) (4,448) -2.5%



16

The breakdown of the NanoPC business line by region is as follows:

The North American business area’s revenues totalled €14.2 million in the first half of 2013, compared with €19.4 million in the first half of 2012, representing a 27.1% decrease. This change, which partly reflected a more unfavourable dollar/euro exchange rate, was mainly attributable to different delivery scheduling. This, combined with an increase in average order value, led to a decrease in sales in the first half of the year. The policy of developing turnover towards key customers with substantial orders is fundamental for medium-long-term turnover growth, but in the short term this has led to less consistent turnover distribution through the course of the year. This phenomenon was very clear this year, as the process of increasing average order size is still in the development phase. The European business area recorded a reduction in revenues from €12.92 million in the first half of 2012 to €11.35 million in the first half of 2013, which represents a total decrease, including inter-regional revenues, of 12.2%. This can be attributed to the situation of economic stasis in the three main European countries – Italy, France and the United Kingdom – in which the Group operates. The Asian business area registered a decrease of 21.3%, from €13.17 million to €10.36 million. Two factors were also at work in this case: on the one hand, the yen-euro exchange rate, which was considerably less favourable, and on the other, a temporary reduction in turnover vis-à-vis a key local customer, which resulted in the shift of part of the turnover forecast for the first half-year to the second half-year. In terms of the main business areas, HPC revenues were very limited in the half-year. However, Eurotech achieved significant recognition at world level in this period: two Eurotech HPCs were ranked first and second in the Green500 classification of the world’s most energy-efficient supercomputers. This is the first time that a European (and therefore an Italian) company has achieved this. Following this important mark of distinction, there was renewed interest in the product, and we believe that in the next 12-18 months orders could grow substantially, even though the market is still characterised by large orders with a limited number of customers. The NanoPC line registered a reduction in turnover of 19.9% (€32,891 thousand in the first half of 2013, compared with €41,056 thousand in the first half of 2012, as already mentioned). The breakdown of revenues by type is as follows:

Below we show the geographical revenue breakdown based on customer location.

(€' 000)





1H 2013 1H 2012 % YoY Change




Gross profit 6,667 7,716 -13.6% 4,799 4,951 -3.1% 6,398 7,828 -18.3% ( 508) ( 107) 374.8% 17,356 20,388 -14.9%

Gross profit margin - % 47.0% 39.7% 42.3% 38.3% 61.7% 59.4% 52.8% 49.7%

EBITDA ( 1,461) ( 134) 990.3%

EBITDA margin - % -4.4% -0.3%

EBIT ( 4,763) ( 3,596) n.s.

EBIT margin - % -14.5% -8.8%


SALES BY TIPE 1H 2013 % 1H 2012 %

Industrial revenues 31,257 94.6% 39,731 94.2%

Services revenues 1,801 5.4% 2,445 5.8%

T OT A LE SA LES A N D SER VIC E R EVEN UES 33,058 100.0% 42,176 100.0%


17

The revenues of the Group’s various companies in the US region decreased by 24.9%, reflecting the factors already mentioned. The US region contributed 41.4% of total turnover in the first half. Japan registered a decline of 23.4%, chiefly reflecting a negative foreign exchange effect in the translation of the Japanese company’s financial statements, as well as a contingent effect due to the temporary reduction in turnover of a local customer. In Europe, again with reference to customer location, turnover reflected the performance of other geographical areas, down 20% and making an unchanged contribution to total turnover of approximately 19%.

BREAKDOWN BY

GEOGRAPHIC AREA 1H 2013 % 1H 2012 %

European Union 6,397 19.4% 8,001 19.0%

United States 13,680 41.4% 18,222 43.2%

Japan 10,155 30.7% 13,261 31.4%

Other 2,826 8.5% 2,692 6.4%

T OT A L SA LES A N D SER VIC E R EVEN UES 33,058 100.0% 42,176 100.0%


18

Balance sheet Non-current assets

Non-current assets in the above table decreased from €119.90 million in financial year 2012 to €108.76 million in the first half of 2013. The change mainly reflects changes in intangible and tangible assets arising from the different conversion ratio for financial statements in foreign currency, as well as price allocation in the currency of the combined foreign entity and the investments made. The Group’s main investments were as follows:

Current assets

(€'000) at June 30, 2013at December 31,

2012Changes

ASSETS

Intangible assets 102,448 112,853 (10,405)

Property, Plant and equipment 4,077 4,756 (679)

Investments in aff iliate companies 352 275 77

Investments in other companies 258 257 1

Deferred tax assets 1,026 1,083 (57)

Other non-current assets 594 672 (78)

Total non-current assets 108,755 119,896 (11,141)

(€'000)

at June 30,

2013

at December 31,

2012

at June 30,

2012

Intangible assets 1,102 3,572 2,424

Property, plant and equipment 104 612 520

Investments 43 0 0

T OT A L M A IN IN VEST M EN T S 1,249 4,184 2,944


2012Changes

Inventories 19,427 18,282 1,145

Contracts in progress 0 850 (850)

Trade receivables 17,717 26,641 (8,924)

Income tax receivables 533 362 171

Other current assets 1,961 2,170 (209)

Receivables from affiliates companies 3 0 3

Other current f inancial assets 101 144 (43)

Cash & cash equivalents 9,613 12,116 (2,503)

Total current assets 49,355 60,565 (11,210)


19

The current assets item decreased, from €60.56 million at 31 December 2012 to €49.36 million in the first half of 2013. The decrease in cash was mainly due to utilisation to repay portions of loans. Trade receivables also decreased during the half-year, reflecting turnover performance and payments received. Working capital Working capital, which comprises current assets net of cash and cash equivalents and non-financial current liabilities, underwent the following changes in the reporting period:

Net working capital decreased by comparison with 31 December 2012. The change chiefly reflects the decrease in trade receivables, owing to a higher turnover concentration at year-end compared with the end of the first half. In addition, reduced trade payables, income tax payables and other current liabilities helped to offset the effects on current assets. Net financial position The net financial position at the end of each period is broken down in the following table.

(€'000) at June 30, 2013 at December 31, 2012 Changes

(b) (a) (b-a)

Inventories 19,427 18,282 1,145

Contracts in progress 0 850 (850)

Trade receivables 17,717 26,641 (8,924)

Receivables from aff iliates companies 3 0 3


Other current assets 1,961 2,170 (209)

Current assets 39,641 48,305 (8,664)

Trade payables (13,303) (15,084) 1,781

Trade payables from aff iliates companies (243) 0 (243)

Income tax liabilities (479) (2,103) 1,624

Other current liabilities (6,748) (7,387) 639

Current liabilities (20,773) (24,574) 3,801

Net working capital 18,868 23,731 (4,863)


20

The change in cash is due to disbursements for investments made, as well as the repayment of portions of loans. Note that in the first half of 2013, operating management had positive cash flow of €2.15 million, much higher than the essentially zero cash flow registered in the first half of 2012. This performance is due to more efficient and prudent management of net working capital. Cash flow

(^) Some of the amounts shown in those columns do not correspond to those shown in the consolidated financial statements at 31 December 2012 and at 30 June 2012, since they reflect the adjustments described in Note 15.

Investments and research and development At 30 June 2013, technical investments (tangible assets) in equipment and instruments amounted to €38 thousand, while investments in other assets totalled €66 thousand. During the period, the Group worked on industrial research and development and technological innovation relating both to new products and to process improvements. The research led to the development of new products/applications in the field of high-integration and low-consumption computers and embedded systems, machine-to-machine integration platforms, network appliances and supercomputers. Technological innovation also led to improved product quality with the aim of reducing production costs and consequently boosting corporate competitiveness. The costs of developing new products were capitalised at €997 thousand in the reporting period (€1,100 thousand in the first half of 2012).

(€'000)

Cash & cash equivalents A (9,613) (12,116)

Cash equivalent B=A (9,613) (12,116)

Short term borrow ing allow ed to aff iliates companies C 0 0

Other current f inancial assets D (101) (144)

Derivative instruments E 231 344

Short-term borrow ing F 14,200 13,036

Business aggregation liabilities G 0 0

Short-term financial position H=C+D+E+F+G 14,330 13,23 6

Short-term net financial position I=B+H 4,717 1,120

Medium/long term borrow ing allow ed to aff iliates companies J 0 0

Other non current f inancial assets K 0 0

Medium/long term borrow ing L 7,168 10,327

Medium-/long-term net financial position M=J+K+L 7,16 8 10,327

(NET FINANCIAL POSITION) NET DEBT N=I+M 11,885 11,447

at December 31, 2012at June 30, 2013

(€'000)

Cash f low generated (used) in operations 2,147 7,432 0Cash f low generated (used) in investment activities (1,125) (2,466) (1,713)Cash f low generated (absorbed) by f inancial assets (1,995) (4,516) (1,530)Net foreign exchange difference (1,530) (1,930) 499Increases (decreases) in cash & cash equivalents (2,503) (1,480) (2,744)Opening amount in cash & cash equivalents 12,116 13,596 13,596Cash & cash equivalents at end of period 9,613 12,116 10,852

at June 30,

2013

at June 30,

2012

Restated^

at December 31,

2012

Restated^


21

Competitive scenario, outlook and future growth str ategy Due to the integration and strengthened relations between the Group’s various companies, the global positioning of individual subsidiaries, as well as the Group’s sound financial position, the outlook for the second half of 2013 is positive, even though market conditions in some sectors and regions remain uncertain. From a financial perspective, the ongoing support of banks is still an important factor in riding out the economic climate and supporting internal growth. The Group’s strategic development will continue, following guidelines similar to those already applied in previous years. The implementation of the strategic plan specifically includes the following actions:

- in NanoPCs, the development and offering of new products/solutions with higher value-added, with a special focus on creating application-ready platforms and ready-to-use products;

- in both NanoPCs and HPCs, a focus on products/solutions increasingly closer to the paradigm of pervasive computing and cloud computing;

- strengthening commercial activities, particularly with regard to indirect as well as direct sales channels; - greater integration between individual Group companies, to (a) achieve greater operating effectiveness, (b)

benefit from the economies of scale achievable, and (c) consolidate the Eurotech brand image; - continuous monitoring of opportunities for new acquisitions, to extend the Group's presence into specific

markets, and as a catalyst for cross-selling between subsidiaries.

Treasury shares of the Parent Company owned by the Parent Company or subsidiaries The Parent Company Eurotech SpA held 420,140 treasury shares at the end of the reporting period. No transactions took place in the first half of 2013.

Disclosure of sovereign exposure Pursuant to Consob Communication DEM/11070007 of 5 August 2011 (itself based on ESMA document 2011/266 of 28 July 2011) relating to the disclosure in financial reports of the exposure of listed companies to sovereign debt, note that the Group does not hold sovereign debt securities.

Events after the reporting period No other significant events took place after the end of the semester other than those indicated in Note 31.

Accounting schedules for the condensed consolidated half-year report at 30 June 2013 Eurotech ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

22

Condensed consolidated half-year financial statemen ts at 30 June 2013

Consolidated statement of financial position

(^) Some of the amounts shown in this column do not correspond to those shown in the consolidated financial statements at 31 December 2012, since they reflect the adjustments described in Note 15.

(€'000) Notes at June 30, 2013at December 31,

2012

Restated^

ASSETS

Intangible assets 1 102,448 112,853

Property, Plant and equipment 2 4,077 4,756

Investments in aff iliate companies 3 352 275

Investments in other companies 3 258 257

Deferred tax assets 26 1,026 1,083

Other non-current assets 594 672

Total non-current assets 108,755 119,896

Inventories 4 19,427 18,282

Contracts in progress 5 0 850

Trade receivables 6 17,717 26,641


Other current assets 8 1,961 2,170

Receivables from aff iliates companies 3 0

Other current f inancial assets 9 101 144

Cash & cash equivalents 10 9,613 12,116

Total current assets 49,355 60,565

Total assets 158,110 180,461

LIABILITIES AND EQUITY

Share capital 8,879 8,879

Share premium reserve 136,400 136,400

Other reserves (40,160) (25,327)

Group shareholders' equity 12 105,119 119,952

Equity attributable to minority interest 12 0 0

Total shareholders' equity 12 105,119 119,952

Medium-/long-term borrow ing 14 7,168 10,327

Employee benefit obligations 15 1,843 1,896

Deferred tax liabilities 26 7,914 9,486

Other non-current liabilities 862 846

Total non-current liabilities 17,787 22,555

Trade payables 16 13,303 15,084

Trade payables from aff iliates companies 16 243 0

Short-term borrow ing 14 14,200 13,036

Derivative instruments 29 231 344

Income tax liabilities 7 479 2,103

Other current liabilities 17 6,748 7,387

Total current liabilities 35,204 37,954

Total liabilities 52,991 60,509

Total liabilities and equity 158,110 180,461


23

Consolidated income statement


INCOME STATEMENT

(€'000)

Revenues from sales of products and services D 33,058 42,176

Other revenues 23 46 99

Cost of materials 18 (15,659) (21,448)

Service costs 20 (6,850) (7,371)

Lease & hire costs (916) (1,146)

Payroll costs 21 (11,490) (13,154)

Other provisions and other costs (1,134) (681)

current assets 22 997 1,100

Depreciation & amortisation 24 (3,430) (3,777)

Operating profit (5,378) (4,202)

Share of associates' profit of equity 3 29 (32)

Finance expense 25 (1,016) (2,067)

Finance income 25 1,802 1,548

Profit before taxes (4,563) (4,753)

Income tax 26 3 305

Net profit (loss) before minority interest (4,560) (4 ,448)

Minority interest 0 0

Group net profit (loss) for period (4,560) (4,448)

Base earnings (losses) per share 13 (0.130) (0.127)Diluted earnings (losses) per share 13 (0.130) (0.127)

Note 1H 2013 1H 2012 Restated^


24

Consolidated statement of comprehensive income


OPERATING RESULTS 1H 2012

(€/000) Restated^

Net profit (loss) before minority inerest (A) (4,560 ) (4,448)

Other elements of the statement of comprehensive income Other comprehensive income to be reclassified to profit or loss insubsequent periods:

Net profit (loss) from Cash Flow Hedge 114 1

Tax effect - -

114 1

Foreign balance sheets conversion difference (10,565) 874

Exchange differences on equity method - 16

Exchange differences on equity investments in foreign companies

176 572

Tax effect - -

176 572

After taxes net other comprehensive income to be reclassified to profit or loss in subsequent periods (B)

(10,275) 1,463

Items not to be reclassified to profit or loss in subsequent periods:

Actuarial gains/(losses) on defined benefit plans 2 1

Tax effect (1) -

1 1

After taxes net other comprehensive income not being reclassified to profit orloss in subsequent periods (C)

1 1

Comprehensive net result (A+B+C) (14,834) (2,984)

Comprehensive minority interest 0 0

Comprehensive Group net profit (loss) for period

(14,834) (2,984)

1H 2013


25

Statement of changes in shareholders’ equity

(^) Some of the amounts shown in these lines do not correspond to those shown in the consolidated financial statements at 31 December 2011, at 31 December 2012 and at 30 June 2012 , since they reflect the adjustments described in Note 15.

(€'000)

Share

capital

Legal

reserve

Share

premium

reserve

Conversion

reserve

Other

reserves

Cash flow

hedge

reserve

Actuarial

gains/(losses) on

defined benefit

plans reserve

Exchange

rate

differences

reserve

Treasury

shares

Profit (loss)

for period

Group

shareholders'

equity

Equity

attributable

to Minority

interest

Total

shareholders'

equity

Balance as at December 31, 2011

Restated^ 8,879 39 136,400 34,514 ( 35,703) ( 376) ( 202) ( 124) ( 1,340) ( 7,246) 134,841 - 134,841

2011 Result allocation - - - - ( 7,246) - - - - 7,246 - - -

Profit (loss) as at June 30, 2012 - - - - - - - - - ( 4,448) ( 4,448) - ( 4,448)

(loss)

- Hedge transactions - - - - - 1 - - - - 1 - 1

- Actuarial gains/(losses) on defined benefit plans 1 1 1

- Foreign balance sheets conversion difference - - - 874 - - - 874 - 874

- Exchange dif ferences on equity method - - - - 16 - - - - - 16 - 16 - Exchange dif ferences on equity investments in foreign companies - - - - - - - 572 - - 572 - 572

Comprehensive result - - - 874 16 1 1 572 - ( 4,448) ( 2,984) - ( 2,984)

Balance as at June 30, 2012 8,879 39 136,400 35,388 ( 42,933) ( 375) ( 201) 448 ( 1,340) ( 4,448) 131,857 - 131,857

(€'000)

Share

capital

Legal

reserve

Share

premium

reserve

Conversion

reserve

Other

reserves

Cash flow

hedge

reserve

Actuarial

gains/(losses

) on defined

benefit plans

reserve

Exchange

rate

differences

reserve

Treasury

shares

Profit (loss)

for period

Group

shareholders'

equity

Equity

attributable

to Minority

interest

Total

shareholders'

equity

Balance as at December 31, 2012

Restated^ 8,879 39 136,400 22,793 ( 42,949) ( 344) ( 220) ( 523) ( 1,340) ( 2,783) 119,952 - 119,952

2012 Result allocation - - - - ( 2,783) - - - - 2,783 - - -

Profit (loss) as at June 30, 2013 - - - - - - - - - ( 4,560) ( 4,560) - ( 4,560)

Comprehensive other profit (loss)

- Hedge transactions - - - - - 114 - - - - 114 - 114 - Actuarial gains/(losses) on defined benefit plans - - - - - - 2 - - - 2 - 2

- Foreign balance sheets conversion difference - - - ( 10,565) - - - ( 10,565) - ( 10,565) - Exchange dif ferences on equity investments in foreign companies - - - - - - - 176 - - 176 - 176

Comprehensive result - - - ( 10,565) - 114 2 176 - ( 4,560) ( 14,833) - ( 14,833)

Balance as at June 30, 2013 8,879 39 136,400 12,228 ( 45,732) ( 230) ( 218) ( 347) ( 1,340) ( 4,560) 105,119 - 105,119


26

Cash Flow Statement


CONSOLIDATED CASH FLOW STATEMENTat June 30,

2012

(€'000) Restated^

CASH FLOWS GENERATED BY OPERATIONS:

Group net profit (4,560) (4,448)

Adjustments to reconcile reported net profit w ith c ash &cash equivalents generated (used) in operations:Depreciation & amortization intangible assets, property, plant and equipment 3,430 3,777Write-dow n of receivables 739 277Interest income (8) (19)

Share of net profit of associate and non-consolidated subsidiaries

(29) 32

Provision for (use of) long-term employee severance indemnities (51) 58Provision for (use of) risk provision 16 205

(Provision for) / use of deferred tax asset / Provision for (use of) deferred tax liability

(1,515) (626)

Changes in current assets and liabilitiesTrade receivables 8,182 4,094Other current assets 38 471Inventories and contracts in process (295) 2,922Trade payables (1,538) (5,657)Other current liabilities (2,262) (1,086)

Total adjustments and changes 6,707 4,448

Cash flow generated (used) in operations 2,147 0

CASH FLOW FROM INVESTMENT ACTIVITIES:Sales of tangible and intangible assets 1 21Interest income 8 19Purchase of intangible f ixed assets (1,102) (2,424)Purchase of tangible f ixed assets (104) (520)

Decreases (Increases) other f inancial assets 0 1,281

Net investments in long-term investments and non-current assets 72 (90)Cash flow generated (used) in investment activities (1,125) (1,713)

CASH FLOW FROM FINANCING ACTIVITIES:

Loans taken 1,200 1,274Increases (decreases) short term loan 453 1,095Repaid loans medium/long term (3,648) (3,899)

Cash flow generated (absorbed) by financial assets ( 1,995) (1,530)

Net foreign exchange difference (1,530) 499Increases (decreases) in cash & cash equivalents (2, 503) (2,744)

Opening amount in cash & cash equivalents 12,116 13,5 96

Cash & cash equivalents at end of period 9,613 10,852

Interest paid 477 637Income taxes paid (get) 2,864 1,547

at June 30,

2013

Explanatory notes to the condensed consolidated half-year financial statements at 30 June 2013 Eurotech ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

27

Explanatory notes to financial statements

A – Corporate information The publication of the condensed consolidated half-year financial statements of Eurotech SpA for the six months to 30 June 2013 was authorised by resolution of the Board of Directors on 29 August 2013. Eurotech SpA is a joint stock company incorporated and domiciled in Italy. The Group has its registered office in Amaro, Italy. Eurotech is a group active in the research, development, and marketing of miniaturised computers (NanoPCs) and highly energy efficient supercomputers with high computing capacity (HPCs). For further information, see Note D.

B – Reporting policies and IFRS compliance The annual consolidated financial statements for the Eurotech Group are prepared in compliance with the international financial reporting standards (IFRSs) issued by the International Accounting Standards Board (IASB) and adopted by the European Commission as per the procedure indicated in Article 6 of the EC Regulation no. 1606/2002 of the European Parliament and European Council dated 19 July 2002. These condensed consolidated half-year financial statements for the six months ended 30 June 2013 were prepared in accordance with IAS 34 - Interim Financial Reporting and Article 154-ter of the TUF. These condensed consolidated half-year financial statements do not include all the information required to prepare consolidated annual financial statements. Consequently, this report should be read in conjunction with the consolidated annual financial report for the year ended on 31 December 2012. Preparation of interim financial statements requires top management to make estimates and assumptions that affect the amounts of reported revenues, costs, assets and liabilities and disclosure concerning contingent assets and liabilities as at the interim reporting date. If in future these estimates and assumptions, which are based on management’s best possible evaluation, were to differ from actual circumstances, they would be amended accordingly in the period when such circumstances materialised. For a fuller description of the Group’s most important evaluation processes, see Section C – “Discretionary evaluations and relevant accounting estimates” – of the consolidated financial statements at 31 December 2012. We also point out that some evaluation processes – in particular the more complex ones such as calculation of any impairment of non-current assets – are generally performed in full only when annual financial statements are drawn up, i.e. when all and any information required is available. The exceptions to this are cases when impairment indicators exist such as to require immediate testing for any impairment. Income taxes are recognised according to the best estimate of the weighted average tax rate expected for the full financial year. The main accounting standards adopted to prepare the condensed consolidated half-year financial statements were the same as those used to prepare the consolidated financial statements at 31 December 2012, except for the adoption of the new standards, amendments and interpretations in force at 1 January 2013. For the first time, the Group adopted standards and amendments requiring the re-presentation of previous financial statements: these included IAS 19 – Employee Benefits, IFRS 13 – Fair Value Measurement and amendments to IAS 1 – Presentation of Financial Statements. The nature and effects of these changes are described below, as required by IAS 34. Various other new standards and amendments came into force for the first time in 2013. However, these had no effect of any kind on the consolidated financial statements or on the condensed consolidated half-year financial statements of the Eurotech Group. The type and impact of each new standard/amendment are listed below: IAS 1 – Presentation of Financial Statements – Presentation of Items of Other Comprehensive Income: the amendment to IAS 1 introduces the grouping of items presented under other comprehensive income. The items that can in future be restated (or recycled) to the income statement (e.g. net profit on net investment hedging, conversion differences in foreign financial statements, net profit on cash flow hedges and net profit/loss on available-for-sale financial assets) must now be presented separately from items that will never be restated (e.g. actuarial gains/losses on defined-benefit plans and


28

revaluation of land and buildings). The amendment only related to presentation procedures and had no effect on the Group’s financial position or results. IAS 12 – Deferred Taxes: Recovery of Underlying assets: this amendment clarifies the calculation of deferred tax on investment property measured at fair value. The amendment introduces the refutable presumption that the carrying value of an investment property, measured using the fair value model set out in IAS 40, will be recovered through sale, and, consequently, the relative deferred tax should be valued on a sale basis. The presumption is refuted if the investment property can be depreciated and is held with the aim of using over time substantially all of the benefits deriving from the investment property, rather than generating these profits from sale. The amendment had no impact on the Group’s financial position, results or disclosure. IFRS 7 – Supplementary Information – Offsetting Financial Assets and Financial Liabilities – Amendments to IFRS 7: these amendments require the entity to provide information on offsetting rights and relative agreements (e.g. guarantees). The disclosure will give the reader of the financial statements useful information to assess the effect of the offsetting agreements on the entity's financial position. New disclosure is required for all financial instruments subject to offsetting pursuant to IAS 32 - Financial Instruments: Presentation. Disclosure is also required for financial instruments subject to framework contracts executing offsetting or similar agreements, whether or not they are offset pursuant to IAS 32. These amendments have had no impact on the Group’s financial position or results. IAS 19 (2011) Employee Benefits (IAS 19R) - IAS 19R includes a number of amendments to the booking of defined-benefit plans, including actuarial gains/losses, which are now recorded under other comprehensive income and permanently excluded from the income statement. Expected returns from plan assets are no longer recorded in the income statement, while interest on the net liabilities (assets) of the plan must be shown in the income statement. This interest must be calculated using the same interest rate applied to update the obligation. Past service costs are now recognised in the income statement at the date at which either i) the plan is amended or reduced, or ii) the relative costs of restructuring or termination of the employment relationship are recognised, whichever is the sooner. Other amendments include new information, for example, information about qualitative sensitivity. In the Group’s case, the transition to IAS 19 (Revised) had an effect on the net obligation of the defined-benefit plan of the Japanese subsidiary, and on the employee severance indemnity of the Italian companies, due to the change in the booking of actuarial gains and losses. These had previously been booked using the corridor method, and were now to be entered in total under items of other comprehensive income and in the relevant equity reserve. Since this is a change of standard applicable retrospectively, the previous financial year was revised, from 1 January 2012. The effects of adopting IAS 19R are explained in detail in Note 15. IFRS 13 Measurement at Fair Value - IFRS 13 introduces, within the scope of IFRS, a single guideline for all fair value measurements. IFRS 13 does not change cases in which fair value must be used, but rather provides a guide on how to measure fair value under IFRS when its application is required or permitted by these international accounting standards. Application of IFRS 13 has had no effect on the Group’s measurement of fair value. IFRS 13 also requires specific information about fair value, part of which replaces the disclosure required by other standards, including IFRS 7 – Financial Instruments: Additional Information. Some of this information is specifically required for financial instruments by IAS 34.16A(j), and therefore affected the condensed consolidated half-year financial statements. IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine – This interpretation applies to the stripping costs sustained in surface mining activity, during the production phase. The interpretation deals with the booking of profits arising from the stripping activity. The new interpretation has had no effect on the Group. As well as the amendments and new standards summarised above, IFRS 1 – First-time Adoption of International Financial Reporting Standards, which is effective for financial years starting on or after 1 January 2013. This change is not significant for the Group, which is not a first-time user of IFRS. The Group has not adopted in advance any new standards, interpretations or amendments that have been issued but are not yet in effect.


29

The condensed consolidated half-year financial statements are drawn up in euro, rounding amounts to the nearest thousand. They consist of the statement of financial position, the income statement, the statement of comprehensive income, the statement of changes in shareholders’ equity, the cash flow statement, and the following explanatory notes. The data used for consolidation have been taken from the income statements and balance sheets prepared by the Directors of individual subsidiaries. These figures have been appropriately amended and restated as necessary to align them with international accounting policies and with uniform group-wide classification policies. Comparability Application of IAS 19 (Revised) led to a re-presentation of the comparative 2012 values, restating the net actuarial gains (losses) recorded from net profit (loss) to the reserve for other components of comprehensive income, and entering actuarial gains (losses) not previously recorded – because the Group was using the corridor method – under other components of comprehensive income. The effects of this are not significant and are described in Note 15.

C – Scope of consolidation The condensed consolidated half-year financial statements include the half-year financial statements of the Parent Company, Eurotech SpA, and of the Italian and foreign subsidiaries over which Eurotech has the right to exercise control, directly or indirectly (through subsidiaries and associates), determining their financial and operating decisions, and the right to obtain related benefits. Subsidiaries are consolidated starting on the date when control was effectively transferred to the Group and cease to be consolidated as from the date when control is transferred outside the Group The companies included in the basis of consolidation on a line-by-line basis at 30 June 2013 are as follows:

Company name Registered office Share capital Group % ownership

Parent company

Eurotech S.p.A. Via Fratelli Solari, 3/A – Amaro (UD) € 8,878,946

Subsidiary companies consolidated line-by-line

Dynatem Inc. Mission Viejo (USA) USD 1,000 100.00%

ETH Devices S.r.o. Bratislava (Slovakia) € 10,000 100.00%

Eurotech Inc. Columbia (USA) USD 26,500,000 100.00%

Eurotech Ltd. Cambridge (UK) GBP 33,333 100.00%

E-Tech USA Inc. Columbia (USA) USD 8,000,000 100.00%

Eurotech France S.A.S. Venissieux Cedex (France) € 795,522 100.00%

I.P.S. Sistemi Programmabili S.r.l. Via Piave, 54 – Caronno Varesino (VA) € 51,480 100.00%

Parvus Corp. Salt Lake City (USA) USD 119,243 100.00%

Saee S.r.l. Via Fratelli Solari, 5 Amaro (UD) € 15,500 100.00%

EthLab S.r.l. Via Dante, 78 – Trento € 115,000 99.99%

Advanet Inc.(2) Okayama (Japan) JPY 72,440,000 90.00% (1) (1) Officially, the Group owns 90% of the company, but as Advanet holds 10% of the share capital in the form of treasury shares, it is fully

consolidated.

Subsidiaries valued at equity

Chengdu Vantron Technology Inc. Chengdu (China) 45.00%

Delos S.r.l. in liquidation Via Roberto Cozzi 53 – Milan 40.00%

eVS embedded Vision Systems S.r.l. Ca’ Vignal2, Strada Le Grazie 15 – Verona 24.00%

Emilab S.r.l. Via Jacopo Linussio, 1 – Amaro (UD) 24.82%

Rotowi Technologies S.p.A. in liquidation (formerly U.T.R.I. S.p.A.)

Via del Follatolo, 12 – Trieste 21.31%


30

The main changes with regard to subsidiaries and affiliates compared with 31 December 2012 are as follows: - on 31 January 2013, an agreement was signed with the shareholder of Vantron Inc. to purchase 7% of shares of the

company, increasing the total equity investment to 45% of the share capital. The following table provides information on the exchange rates used to translate foreign companies’ financial statements into the Eurotech Group’s presentation currency (the euro). The rates correspond to those released by the Italian Foreign Exchange Bureau (Ufficio Italiano Cambi).

Currency

Average

6Months 2013

As of June

30, 2013

Average

2012

As of

December 31,

Average

6Months 2012

As of June

30, 2012

British pound sterling 0.85083 0.85720 0.81087 0.81610 0.82252 0.80680

Japanese Yen 125.45912 129.39000 102.49188 113.61000 103.31024 100.13000

USA Dollar 1.31337 1.30800 1.28479 1.31940 1.29647 1.25900


31

D – Segment reporting For management purposes, the Group is organised into business segments: the NanoPC and HPC (high performance computers) segments are the largest of these. Given the HPC segment’s current low contribution to total Group turnover, detailed information is provided solely for the NanoPC segment, broken down geographically in relation to the various Group entities currently monitored by senior management. The Group’s geographical areas in the NanoPC segment are defined according to the location of Group assets and operations. They are: Europe, North America and Asia. Management monitors the EBIT of the individual business units separately for the purposes of resources allocation and performance assessment. Business segments The following table shows data on revenues and Group results for the half-years to 30 June 2013 and 30 June 2012 respectively.

The breakdown of revenues for the NanoPC segment is as follows:

The table below shows assets and investments in the Group’s individual business segments at 30 June 2013 and 31 December 2012.

(€'000)

1H 2013 1H 2012 %YoY Chg 1H 2013 1H 2012 %YoY Chg 1H 2013 1H 2012 %YoY Chg

Sales and service revenue by segment

Sales and service revenue by segment 32,891 41,056 -19.9% 167 1,120 -85.1% 33,058 42,176 -21.6%

Ebitda by segment (1,461) (134) 990.3% (487) (291) -67.4% (1,948) (425) 358.4%

Ebit by segment (4,763) (3,596) -32.5% (615) (606) -1.5% (5,378) (4,202) -28.0%

Total EBIT (5,378) (4,202) -28.0%

Net f inance income (expense) 786 (519) 251.4%

Shares of associates' prof it (loss) 29 (32) 29 (32) -190.6%

Profit before tax of continuing operations (4,563) (4,753) 4.0%

Income tax 3 305 99.0%

Net profit (loss) (4,560) (4,448) -2.5%


(€' 000)





1H 2013 1H 2012 % YoY Change





(Migliaia di Euro)

1° semestre 2013

1° semestre 2012

Var % 13-12

1° semestre 2013

1° semestre 2012

Var % 13-12

1° semestre 2013

1° semestre 2012

Var % 13-12

1° semestre 2013

1° semestre 2012

Var % 13-12

1° semestre 2013

1° semestre 2012

Var % 13-12

Ricavi verso terzi 13.779 18.325 8.922 9.597 10.190 13.134 0 0 32.891 41.056

Ricavi infra-settoriali 400 1.124 2.424 3.321 173 38 ( 2.997) ( 4.483) 0 0

Ricavi delle vendite totali 14.179 19.449 -27,1% 11.346 12.918 -12,2% 10.363 13.172 -21,3% ( 2.997) ( 4.483) 33,1% 32.891 41.056 -19,9%

Nord America Europa Asia Ret tif iche, storni ed eliminazioni Totale


32

Segment assets at 30 June 2013 do not include equity investments in unconsolidated subsidiaries, affiliates and other companies (€0.6 million) and the current income taxes of the Parent Company (€0 million). Assets and investments in the NanoPC segment by region are shown in the table below:

(€'000)

1H 2013 31.12.2012 Restated^

1H 2013 31.12.2012 Restated^

1H 2013 31.12.2012 Restated^

Assets and liabilites

Segment assets 154,003 172,929 3,497 6,530 157,500 179,459 Investments in subsidiaries non consolidated, associate & other companies

610 532 0 0 610 532

Unallocated assets 0 470

Total assets 154,613 173,461 3,497 6,530 158,110 180,461

Segment liabilities 49,525 58,034 3,466 2,475 52,991 60,509

Unallocated liabiities 0 0

Total liabilities 49,525 58,034 3,466 2,475 52,991 60,509

Other segment information

Investments in tangible assets 104 612 0 0 104 612

Investments in intangible assets 1,101 3,531 1 41 1,102 3,572

Depreciation & amortisation 3,302 7,424 128 613 3,430 8,037


(€' 000)

1H 201331.12.2012 Restated^

1H 201331.12.2012 Restated^

1H 201331.12.2012 Restated^

1H 201331.12.2012 Restated^

1H 201331.12.2012 Restated^

Activities by sector 55,694 58,714 54,325 54,146 87,782 102,227 ( 43,798) ( 42,158) 154,003 172,929

Investments 769 2,959 260 483 176 701 0 0 1,205 4,143

North America Europe Asia Correct ion, reversal and

elimination Total


33

E – Breakdown of main balance sheet items

1 – Intangible assets The following table shows the changes in the historical cost and accumulated amortisation of intangible assets in the reporting period:

The decrease of €10.40 million is attributable to a combination of new investments totalling €1.10 million, a foreign exchange effect of €8.66 million and amortisation of €2.84 million registered in the first half-year. The total value decreased from €112.85 million last year to €102.45 million in the first half of 2013. Investments made in the first six months of the year mainly relate to Group plans to develop new products, either on the new Cloud technology or on low-energy consumption products.

(€ '000)

DEVELOPM ENT COSTS

GOODWILL SOFTWARE

TRADEM ARKS PATENTS

ASSETS UNDER

CONSTRUCTION & ADVANCES

OTHER INTANGIBLE

ASSETS

TOTAL INTANGIBLE

ASSETS

Purchase or production cost 11,517 81,987 27,231 4,069 36,292 161,096

Previous years' impairment ( 796) ( 807) ( 11,414) ( 49) - ( 13,066)

Previous years' amortisation ( 8,453) - ( 5,210) - ( 21,514) ( 35,177)

OP EN IN G B A LA N C E 2,268 81,180 10,607 4,020 14,778 112,853

Purchases 222 - 105 775 - 1,102

Disposals - - ( 95) - - ( 95)

Other changes ( 1,494) ( 6,097) ( 1,331) ( 525) ( 3,432) ( 12,879)

Transfers 1,490 - - ( 1,490) - -

Amortisation in period ( 902) - ( 317) - ( 1,625) ( 2,844)

Reversal of cumulative amortisation - - 95 - - 95

Other changes in cumulative impairment - 64 136 - - 200

Other changes in cumulative amortisation 2,035 - 35 - 1,946 4,016

T OT A L C H A N GES 1,351 ( 6,033) ( 1,372) ( 1,240) ( 3,111) ( 10,405)

Purchase or production costs 11,735 75,890 25,910 2,829 32,860 149,224

Impairment ( 796) ( 743) ( 11,278) ( 49) - ( 12,866)

Cumulative amortisation ( 7,320) - ( 5,397) - ( 21,193) ( 33,910)

C LOSIN G B A LA N C E 3,619 75,147 9,235 2,780 11,667 102,448


34

Other changes, other changes cumulative write-downs and other changes cumulative amortisation refer to exchange rate differences accrued on the initial balances of values expressed in foreign currency, and specifically to goodwill and other intangible assets. The latter item includes the value of customer relationships defined at the time of purchase price allocation. Goodwill refers to the higher value paid, when fully consolidated subsidiaries were acquired, in excess of the fair value of the assets and liabilities acquired. As of 1 January 2004, goodwill is no longer been amortised and is tested at least annually for impairment. For the purposes of annual impairment testing, the individual goodwill items and assets with indefinite and definite useful life recorded, purchased through business combinations, were allocated to the respective cash generating units (CGUs) corresponding to the legal entity or group of companies to which reference is made to test for impairment. The carrying value of goodwill and trademarks with an indefinite useful life allocated to each of the CGUs is shown below:

The change in the carrying values of Advanet Inc., Eurotech Inc. and Eurotech Ltd. is due to the fact that the amounts concerned are expressed in the foreign operations’ functional currency and consequently converted at each balance sheet date using the exchange rate in force at that date. To check for any impairment of goodwill or other intangible assets with a definite useful life, at 30 June 2013 the Group updated the calculation processes used at 31 December 2012, which had also been made with the support of independent experts. The reported data for the first half of 2013 were compared with the final forecasts for the current year and with the figures for the original 2013 budged used at December 2012. This analysis provided the opportunity to make a slight downwards revision to the full-year 2013 results for some of the Group’s companies with significant associated goodwill or assets with a definite useful life. The original forecasts were included in the business and financial plans for 2013-2015 used to perform the impairment test at 31 December 2012. With particular reference to Eurotech Inc., while there were substantial differences between the results generated by the US subsidiary at 30 June 2013 and those forecast in the budget, no further loss indicators were revealed by analysis of the amount and marginality of the current order book and the current market conditions in which the CGU operates. In view of this, management decided to adjust the impairment test of the US subsidiary to take account of the revisions to estimates of future cash flows for the 2013-2015 plan period for the purposes of prudence, whilst keeping the other test parameters used at 31 December 2012. This revised estimate did not result in any need to write down the goodwill assigned to the subsidiary Eurotech Inc.. Moreover the value of the American CGU deriving from the impairment test as at 30 June 2013 based on revised cash flows for the 2013-2015 period is not substantially different from the value deriving from the sensitivity analysis made at the reporting dates to support the evaluation of impairment test as at 31 December 2012 based on approved forecast plans For the other CGUs, a new impairment test as at 30 June 2013 was not considered necessary, since even with a prudent revised future cash flow forecasts for 2013 no loss indicators were identified that could jeopardize the valuation of the recoverability, based on value in use, of the goodwill and trademarks with an indefinite useful life for each CGU

C ash genera t ing units

Go o dwillT rademark with

an inde f inite use ful life

Go o dwillT rademark with

an indef inite useful life

Advanet Inc. 43,100 8,184 49,087 9,321 Eurotech Inc. (ex Applied Data Systems e ex Arcom Inc.) 24,333 - 24,123 -

Eurotech Ltd. (ex Arcom Ltd.) 5,095 - 5,351 -

Eurotech France S.a.s. 1,051 - 1,051 -

Parvus Corp. 1,478 - 1,478 -

Other 90 - 90 -

T OT A L 75,147 8,184 81,180 9,321

at June 30, 2013 at December 31, 2012


35

that was carried out using the impairment test at 31 December 2012. Management therefore confirmed the valuations made at the time of the 2012 annual financial statements. Management will continue to carry out monthly analyses of the CGU’s performance, especially in view of the concentration in turnover in the final quarter of the year, and, if further signs of significant impairment come to light in the second half of the year, will carry out the necessary valuations as required by the applicable accounting standards. Generally speaking, the directors also assumed in their assessments (as they did at 31 December 2012) that, although some external and internal indicators (particularly Eurotech's stock market performance and the Group’s operating result, which was not positive) might signal net asset impairment, there was no need for any write-downs. They believe that the market trend reflects the international economic situation. In terms of the internal indicators, the Group’s total operating result reflects a performance that was partly forecast for the first half of 2013, which (as happened in 2012) is expected to be reversed in the second half. It also combines the operating results of the individual entities, which does not allow for a complete and exhaustive reading of the reported data of the individual CGUs to which the goodwill and assets with an indefinite useful life are allocated. Future developments at the Eurotech group and expectations for the coming years based on existing orders, stakeholder relations and products currently in the portfolio, as well as products developed, particularly in recent years, are regarded by the Directors as important factors in support of their decision not to change the values posted.

2 – Property, plant and equipment The table below shows changes in the historical cost and accumulated depreciation and the value of the assets in the period under review:

(€ '000)

LAND AND BUILDINGS

PLANT AND M ACHINERY

INDUSTRIAL & COM M ERCIAL

EQUIPM ENT OTHER ASSETS

ASSETS UNDER

CONSTRUCTION & ADVANCES

LEASED ASSETS

TOTAL PROPERTY,

PLANT & EQUIPM ENT

Purchse of production cost 790 7,142 4,939 5,782 5 1,180 19,838

Previous year's depreciation ( 116) ( 5,927) ( 4,435) ( 4,286) - ( 318) ( 15,082)

OP EN IN G B A LA N C E 674 1,215 504 1,496 5 862 4,756

Purchases - 7 31 66 - - 104

Disposals ( 1) - - ( 3) - - ( 4)

Other changes - ( 666) ( 168) ( 120) - ( 30) ( 984)

Depreciation in period ( 8) ( 209) ( 122) ( 213) - ( 34) ( 586)

Reversal of cumulative depreciation - - - 3 - - 3

Other changes in cumulative amortisation - 613 136 34 - 5 788

T OT A L C H A N GES ( 9) ( 255) ( 123) ( 233) - ( 59) ( 679)

Purchase or production cost 789 6,483 4,802 5,725 5 1,150 18,954

Cumulative depreciation ( 124) ( 5,523) ( 4,421) ( 4,462) - ( 347) ( 14,877)

C LOSIN G B A LA N C E 665 960 381 1,263 5 803 4,077


36

The other changes item, which refers both to cost and to the related cumulative depreciation, concerns the different exchange rates at which foreign entities’ values were converted at 30 June 2013 compared with those applied at 31 December 2012. Purchases made in the half-year related mainly to computers, office equipment and industrial equipment. Fixed assets under lease refers, for €634 thousand, to assets subject to lease agreements, which are booked using the financial method and relate exclusively to the land and buildings in Amaro (UD), the Company's main production site, and, for €169 thousand, to a machine purchased during the period by Japanese subsidiary Advanet.

3 – Investments in affiliates and other companies The table below shows changes in investments in unconsolidated subsidiaries, affiliates and other companies in the reporting period:

The equity investment in Chengdu Vantron Technology Inc. increased by the amount agreed upon to purchase 7% of the company’s share capital. The write-ups/write-downs item relates to application of the equity accounting method to investments in affiliates. Other changes relate to the difference in the exchange rate used to convert the values of the equity investments at 30 June 2013 compared with the rate applied at 31 December 2012.

(€'000) INITIAL VALUE INCREASES DECREASES WRITE-UPS

/WRITE-DOWN OTHER EOP VALUE % OWNERSHIP

Investments in associate companies:

Chengdu Vantron Technology Inc. 192 43 - - 5 240 45.00%

Delos S.r.l. in liquidazione 7 - - - - 7 40.00%

Emilab S.r.l. 69 - - 29 - 98 24.82%

eVS embedded Vision Sy stems S.r.l. 7 - - - - 7 24.00%

Rotowy Technologies S.p.A. (ex U.T.R.I. S.p.A.) - - - - - - 21.32%

T OT A L IN VEST M EN T S IN A SSOC IA T E C OM P A N IES 275 43 - 29 5 352

Investments in other companies:

Cosint 3 - - - - 3

ALC Consortium 3 - - - 3

Consorzio Ecor' IT 2 - - - - 2

Consorzio Aeneas 5 - - - - 5

Inasset S.r.l. 44 - - - - 44 2.90%

Kairos Autonomi 199 - - - 1 200 19.00%

Others 1 - - - - 1

T OT A L IN VEST M EN T S IN OT H ER C OM P A N IES 257 - - - 1 258

at June 30, 2013


37

Eurotech owns the following equity investments in affiliates to which the equity accounting method is applied:

− Chengdu Vantron Technology = 45%, following the purchase of shares in 2007, a sale of shares in December 2009, 2010 and 2011 and another purchase in 2013;

− Emilab Srl = 24.82%, created in 1998;

− Delos Srl = 40%, created during the first half of 2005 and placed in liquidation in July 2010;

− eVS embedded Vision Systems Srl = 24%, created in the first half of 2007 and a spin-off from the University of Verona;

− Rotowi Technologies S.p.A., in liquidation (formerly U.T.R.I. S.p.A.) = 21.32%, following a capital increase and the purchase of shares in 2007 and 2008.

4 - Inventories The following table shows the inventory breakdown at the end of the periods under review:

Inventories at 30 June 2013 amounted to €19.43 million, net of inventory impairment totalling €2.85 million. The value of inventories was higher than at end-2012, chiefly due to an increase in the raw and auxiliary materials and consumables item to respond to existing orders at the end of the half-year for delivery by year-end.

(€'000)

at June 30,

2013

at December 31,

2012

Raw & auxiliary materials and consumables - gross 9,347 7,807

Inventory w rite-dow n provision (1,127) (1,116)

Raw & auxiliary materials and consumables - net 8,220 6,691

Work in process and semi-f inished goods - gross 4,828 5,228

Inventory w rite-dow n provision (138) (18)

Work in process and semi-finished goods 4,690 5,210

Finished poducts and goods for resale - gross 8,084 7,728

Inventory w rite-dow n provision (1,588) (1,451)

Finished products and goods for resale - net 6,496 6,277

Advances 21 104

T OT A L IN VEN T OR IES 19,427 18,282


38

5 – Work in progress The following table shows information relating to work in progress at the reporting date:

6 – Trade receivables The schedule below shows the breakdown of trade receivables and the respective adjustment reserves at 30 June 2013 and 31 December 2012:

(€'000)

at June 30,

2013

at December 31,

2012

Contract revenues recognised as revenue in the period 0 2,273

Contract costs bome as at balance-sheet date 0 1,325

P ro f its reco gnised as at ba lance-sheet date - 948

Dow n payments received 0 699

Gross amount ow ed to customer for contractual w ork 0 0

Gross amount ow ed by customer for contractual w ork 0 2,273

Contract costs and proits recognised as at balance-sheet date 0 2,273

Revenues recognised in previous periods 4,377 2,104

Billing based on completion status 4,377 3,527

Gro ss amo unt o wed by custo mer fo r co nt ractual wo rk - 850

Gro ss amo unt o wed to custo mer fo r co nt ractual wo rk - -


39

Note that, at the reporting date, the Group did not present significant concentrations of credit risk. It is believed that these receivables are collectable within one year. Trade receivables are non-interest bearing and generally fall due within 90-120 days. Trade receivables, including the relative doubtful debt provision, decreased by €8.79 million compared with 31 December 2012. The decrease was mainly due to regular as-due payment of trade receivables, as well as to the different distribution of turnover in the half-year compared with the usual situation in the final months of the year. The receivables include €0.5 million in bank receipts presented subject to collection, but not yet due at the end of the period. No transactions to sell receivables have been entered into during 2013. Receivables are shown after a doubtful debt provision of €1.88 million. The net increase in the period was €0.13 million, due to the combined effect of €0.74 million in allocations in the period to adjust, individually, the amounts of the receivables to their presumed realisable value, and the difference for the different exchange rate used, as well as the use of the provision for €0.62 million, since the conditions for deducting the allocation made were met. The allocation for the year includes a further prudential write-down of €0.57 million on a customer of subsidiary Eurotech Inc., which had already been partially written down at 31 December 2012. The receivable has been 70% written down to date. Group policy is to specifically identify the individual receivables to be written down, and the allocations made therefore reflect a specific write-down.

7 – Tax receivables and payables Receivables for income taxes represent receivables from individual governments for direct taxation (IRES and income taxes in various countries) which should be recovered within the next year, as well as receivables for withholdings made on dividends paid out to the Parent Company. Income tax payables are made up of current taxes relating to the period yet to be liquidated, and represent the amounts that the individual companies must pay to the tax authorities of the respective countries. These payables are calculated according to the tax rates currently in force in each country. Payables for foreign taxes amounted to €432 thousand (2012: €2,035 thousand), while Italian tax payables amounted to €47 thousand (2012: €68 thousand).

8 – Other current assets

(€'000)

at June 30,

2013

at December 31,

2012

Trade receivables - customers 19,602 28,392

Trade receivables - aff iliate companies 3 0

Doubtful debt provision (1,885) (1,751)

T OT A L T R A D E R EC EIVA B LES 17,720 26,641


40

The schedule below shows the composition of other current assets at 30 June 2013 and 31 December 2012:

Tax receivables mainly consist of receivables for indirect (VAT) taxation. VAT receivables do not bear interest and are generally settled with the competent tax authority on a monthly basis.

9 – Current financial assets The amount of €100 thousand refers to 2,500 shares of Veneto Banca Holding Scarl., held in the portfolio and acquired at the end of June 2012. These assets are classed as financial assets recorded at fair value in the income statement.

10 – Cash & cash equivalents The table below shows the composition of cash and cash equivalents at 30 June 2013 and 31 December 2012:

Bank deposits are mostly on demand and are remunerated at a variable rate of interest. The fair value of cash and cash equivalents was €9.61 million (€12.12 million at 31 December 2012). Cash and cash equivalents decreased by €2.50 million compared with 31 December 2012, due mainly to the payment of instalments on loans falling due during the first half-year and investments in tangible and intangible assets made in the

(€'000)

at June 30,

2013

at December 31,

2012

Amounts receivable for grants 200 200

Advance payments to suppliers 191 137

Tax receivables 275 634

Other receivables 115 57

Accrued income and prepaid expenses 1,180 1,142

T OT A L OT H ER C UR R EN T A SSET S 1,961 2,170

(€'000)

at June 30,

2013

at December 31,

2012

Bank and post off ice deposits 9,588 12,089

Cash and valuables in hand 25 27

T OT A L C A SH & C A SH EQUIVA LEN T S 9,613 12,116


41

period. Operating assets, meanwhile, registered a positive cash flow, as shown in the analysis of the cash flow statement.

11 – Net financial position The Group’s net financial position is shown below:

Due to cash generation from the above operating assets, the net financial position is unchanged and under control.

12 – Equity The schedule below shows the composition of shareholders’ equity at 30 June 2013 and 31 December 2012:

(^) Some of the amounts shown in this column do not correspond to those shown in the consolidated financial statements at 31 December 2012, since they reflect the adjustments described in Note 15.

(€'000)

Cash & cash equivalents A (9,613) (12,116)

Cash equivalent B=A (9,613) (12,116)

Short term borrow ing allow ed to aff iliates companies C 0 0

Other current f inancial assets D (101) (144)

Derivative instruments E 231 344

Short-term borrow ing F 14,200 13,036

Business aggregation liabilities G 0 0

Short-term financial position H=C+D+E+F+G 14,330 13,23 6

Short-term net financial position I=B+H 4,717 1,120

Medium/long term borrow ing allow ed to aff iliates companies J 0 0

Other non current f inancial assets K 0 0

Medium/long term borrow ing L 7,168 10,327

Medium-/long-term net financial position M=J+K+L 7,16 8 10,327

(NET FINANCIAL POSITION) NET DEBT N=I+M 11,885 11,447

at December 31, 2012at June 30, 2013


2012

Restated^

Share capital 8,879 8,879

Share premium reserve 136,400 136,400

Other reserves (40,160) (25,327)

Group shareholders' equity 105,119 119,952

Equity attributable to minority interest 0 0

Total shareholders' equity 105,119 119,952


42

The share capital at 30 June 2013 was made up of 35,515,784 ordinary shares, wholly subscribed and paid up, with no nominal value. The balance of the issuer’s legal reserve at 30 June 2013 amounted to €39 thousand and was formed by earnings allocated until the financial year (FY) that ended on 31 December 2005. The share premium reserve, which relates entirely to the Parent Company, was booked for a total amount of €136.4 million. The positive translation reserve of €12.23 million was generated by inclusion in the condensed consolidated half-year financial statements of the statements of financial position and income statements of US subsidiaries Parvus Corp., Eurotech Inc., Dynatem Inc. and E-Tech USA Inc., UK subsidiary Eurotech Ltd. and Japanese subsidiary Advanet Inc.. The other reserves item was negative for €45.73 million and comprised the Parent Company’s surplus reserve, formed by losses carried forward, allocations of retained earnings from prior years and other reserves of miscellaneous origin. The cash flow hedge reserve, which includes cash flow hedge transactions pursuant to IAS 39, was negative for €230 thousand and decreased by €114 thousand gross of the tax effect, which was not recognised due to absence of the relative prerequisites. The foreign exchange reserve in which – based on IAS 21 – foreign exchange differences relating to infragroup foreign-currency loans that constitute part of a net investment in foreign operations are recognised, was negative by €347 thousand and decreased by €176 thousand gross of the related tax effect; again it was not recorded due to the absence of the prerequisites. Pursuant to IAS 19 (Revised), changes in the reporting period included the effect of actuarial gains (losses) on the employee severance indemnity and defined-benefit plans of the Japanese company, which was booked under items of comprehensive income. Reserves at 31 December 2012 were adjusted for the retrospective application of this standard in the amount of €220 thousand, net of the relative tax effect. At the end of the reporting period the Parent Company, Eurotech SpA, held 420,140 treasury shares. Their number remained unchanged compared with 31 December 2012 and the shares had no effect either on the income statement or on equity.

13 – Basic and diluted earnings per share Basic earnings (loss) per share (EPS) is calculated by dividing the income of the reporting period pertaining to ordinary shareholders of the Parent Company by the weighted average number of ordinary shares outstanding during the reporting period, net of treasury shares. During the periods under comparison, no capital transactions took place leading to EPS dilution. The table below shows the earnings and information on the shares used to calculate base and diluted EPS.


43

14 - Borrowings The following table shows the breakdown of short- and medium-/long-term borrowings at 30 June 2013:

A new loan was contracted during the first half of 2013 for €1.2 million, while portions of medium/long-term loans falling due were paid in the amount of €3.6 million.

at June 30,

2013

at June 30,

2012

Net income (loss) attributable to parent company shareholders ( 4,560,000) ( 4,448,000)

Weighted average number of ordinary shares including ow n shares 35,515,784 35,515,784

Ow n shares ( 420,140) ( 420,140)

Weighted average number of ordinary shares except ow n shares 35,095,644 35,095,644

Net income (loss):

- per share ( 0.130) ( 0.127)

- per share diluted ( 0.130) ( 0.127)

LENDER COM PANY BALANCE ON

31.12.2012 BALANCE ON

30.06.2013 SHORT TERM within 12 months

Total M edium and long-term

M id term Over 12 months

Long term Over 5 years

CURRENT OUTSTANDINGS - (a) 6,494 6,947 6,947 - - -

Finance Lease Eurotech S.p.A. 122 - - - - -

Finance Lease I.P.S. Sist.Progr. S.r.l. 10 4 4 - - -

Finance Lease Advanet Inc. 219 173 20 153 153 -

TOTAL OTHER FINANCINGS 351 177 24 153 153 -

Iccrea Banca Impresa Eurotech S.p.A. - 964 964 - - -

Totale Gruppo Bancario Iccrea - 964 964 - - -

Banca Pop. Friuladria Eurotech S.p.A. 3,000 2,000 2,000 - - -

Total Credi t Agricole 3,000 2,000 2,000 - - -

Cassa di Risparmio del FVG Eurotech S.p.A. 6,000 5,000 2,000 3,000 3,000 -

Total Gruppo INTESA - SAN PAOLO 6,000 5,000 2,000 3,000 3,000 -

The Chugoku Bank Ltd Advanet Inc. 735 518 128 390 390 -

Total The Chugoku Bank Ltd 735 518 128 390 390 -

Cassa Rurale della Valle dei Laghi EthLab S.r.l. 307 286 44 242 191 51

Total Credi to Coperativo Banks 307 286 44 242 191 51

Unicredit Eurotech S.p.A. 6,476 5,476 2,093 3,383 3,383 -

Total Gruppo Unicredit 6,476 5,476 2,093 3,383 3,383 -

TOTAL BANK DEBT - (c) 16,518 14,244 7,229 7,015 6,964 51

TOTAL OTHER FINANCING AND BANK DEBT - [(b) + (c)] 16,869 14,421 7,253 7,168 7,117 51

TOTAL DEBT - [(a) + (b) + (c)] 23,363 21,368 14,200 7,168 7,117 51


44

15 - Employee benefits The table below shows the breakdown of employee benefits at 30 June 2013 and 31 December 12:

(*) The 2012 values reflect the application of IAS 19 (Revised).

Defined benefit plans In Italy and in Japan, the Group has defined-benefit pension plans in place that require contributions to a separately administered provision. IAS 19 (Revised) was applied retroactively as of 1 January 2012. As a result, the expected return of the assets servicing the defined-benefit plan was not booked to the income statement. The interest on the net liabilities of the defined-benefit plan (not including the plan assets) was, however, booked to the income statement. The interest was calculated using the discount rate used to measure the pension plan's net liabilities or assets. In addition, the past service cost (not vested) can no longer be deferred to the future vesting period. All past service costs are instead recognised in the income statement at the date of the plan's amendment or at the date of recognition of the related restructuring costs or cessation of the employment relationship, whichever is earlier. Until 2012, past service cost (not vested) was booked on a line-by-line basis using the average plan vesting period. With the transition to IAS 19 (Revised), the past service cost is booked immediately to the income statement if the benefits have vested immediately with the introduction, or amendment, of the pension plan. Impact of transition to IAS 19 (Revised) In the Group’s case, the transition to IAS 19 (Revised) had an effect on the net obligation of the defined-benefit plan of the Japanese subsidiary, and on the employee severance indemnity of the Italian companies, due to the change in the booking of actuarial gains and losses. These had previously been booked using the corridor method, and were now to be entered in total under items of other comprehensive income and in the relevant equity reserve. Since this was a change to a standard applicable retrospectively, the previous year was revised, from 1 January 2012. The effect on the consolidated half-year statement of financial position was as follows:

(€'000)

at June 30, 2013 at December 31, 2012 Restated^

at December 31, 2012

Employees' leaving indemnity 420 450 379

Foreing Employees' leaving indemnity 1,333 1,359 1,210

Employees' retirement fund 90 87 87

T OT A L EM P LOYEES' B EN EF IT S 1,843 1,896 1,676


45

There was no effect on the income statement in the first half of 2013 or 2012. In addition, there was no material impact on the condensed consolidated half-year cash flow statement or on basic and diluted earnings per share.

16 - Trade payables The schedule below shows the composition of trade payables at 31 December 2012 and 30 June 2013:

Trade payables at 30 June 2013 came to €13.55 million, decreasing by €1.54 million compared with 31 December 2012. Trade payables are non-interest bearing and, on average, are settled 90-120 days after invoice date.

17 – Other current liabilities The table below shows the breakdown of other current liabilities at 30 June 2013 and 31 December 2012:

(€ '000) 30/06/2013 31/12/2012 30/06/2013 31/12/2012

Defined benefit plans reserve increase (long term) (71) (71) (234) (236)

Deferred tax assets increase (long term) 0 0 87 87

Impact on Equity (71) (71) (147) (149)

Shareholder of parent company ( 71) ( 71) ( 147) ( 149)

Minority - - - -

Defined benefit plans

Italy Japan

(€'000)

at June 30, 2013 at December 31,

2012

Third parties 13,303 15,084

Affiliate companies 243 0

T OT A L T R A D E P A YA B LES 13,546 15,084


46

Other payables Other payables include amounts payable to employees for salaries as well as for holidays and paid leaves of absence accruing and not taken by employees at the reporting dates.

F - Breakdown of key income statement items

18 – Costs of raw & auxiliary materials and consumables used

Costs of raw & auxiliary materials and consumables used decreased by 27.0% in the reporting period, from €21.45 million in the first half of 2012 to €15.66 million in the first half of 2013. As well as the forex effect, the decrease reflects lower turnover development in the first half of 2013 compared with the previous year.

(€'000)

at June 30, 2013 at December 31,

2012

Social contributions 530 726

Other 3,567 2,929

Advances from customers 1,304 1,538

Other tax liabilities 287 545

Gross amount ow ed to customer for contractual w ork 0 699

Accrued expanses 1,060 950

T OT A L OT H ER C UR R EN T LIA B ILIT IES 6,748 7,387

(€'000) 1H 2013 1H 2012

Purchases of raw materials, semi-f inished and f inished products 16,890 19,180

Changes in inventories of raw materials 487 340

Change in inventories of semi-f inished and f inished products (1,718) 1,928

T OT A L C OST OF M A T ER IA LS 15,659 21,448


47

19 – Other operating costs net of cost adjustments

The other operating costs item in the table above, net of cost adjustments for internal increases, decreased from €21.25 million in the first half of 2012 to €19.39 million in the first half of 2013. The other allocations and other costs item includes an allocation to the doubtful debt provision of €739 thousand, regarded as non-recurring and mainly prudential.

20 – Service costs

Services costs decreased by 7.1% between the periods under review, from €7.37 million to €6.85 million, partly due to the cost containment policy as well as the different conversion ratio for financial statements denominated in foreign currencies.

(€'000) 1H 2013 1H 2012

Service costs 6,850 7,371

Rent and leases 916 1,146

Payroll 11,490 13,154

Accruals and other costs 1,134 681

Cost adjustments for in-house generation of non-current assets (997) (1,100)

Operat ing co sts net o f co st adjus tments 19,393 21,252

(€'000) 1H 2013 1H 2012

Industrial services 2,205 2,192

Commercial services 1,772 1,582

General and administrative costs 2,873 3,597

T o ta l co s ts o f serv ices 6,850 7,371


48

21 – Payroll costs

In the period under review, payroll costs decreased. This was the result of efficiency measures introduced in the past 12 months. As the following table shows, the number of Group employees decreased between the periods under review, from 429 in the first half of 2012 to 416 in the first half of 2013, with a decrease of 4 compared with 31 December 2012.

22 – Cost adjustments for internally generated non-current assets At 30 June 2013, cost adjustments for internally generated non-current assets amounted to €997 thousand (vs. €1,100 thousand at 30 June 2012). It refers entirely to the capitalisation of costs for internal staff, materials and services incurred for new-product development projects in the fields of 1) computers, systems and NanoPC modules, 2) machine-to-machine SW platforms and 3) HPCs. More specifically, if these costs had been deducted from the corresponding income statement item, there would have been a reduction of €169 thousand in materials costs (€93 thousand at 30 June 2012), €647 thousand in payroll costs (€791 thousand at 30 June 2012) and €181 thousand in services costs (€216 thousand at 30 June 2012).

(Migliaia di Euro)

1° semestre 2013

1° semestre 2012

Salari, stipendi e oneri sociali 9.831 12.897

Trattamento di f ine rapporto 1.424 160

Altri costi 235 97

T o ta le co sto del perso na le 11.490 13.154

Employees at June 30, 2013

at December 31,

2012 at June 30, 2012

Manager 15 15 16

Clerical w orkers 339 344 351

Line w orkers 62 61 62

T OT A L 416 420 429


49

23 – Other revenues

Grants for the 2012 half-year refer mainly to funding for employee training activities.

24 – Amortisation, depreciation and write-downs

Amortisation, depreciation and write-downs decreased from €3.77 million in the first half of 2012 to €3.43 million in the first half of 2013. This change was mainly due to the lesser impact of amortisation/depreciation of both tangible and intangible assets. Amortisation relating to PPA relates exclusively to customer relationships (€1.62 million, compared with €1.88 million at 30 June 2012). No fixed assets were written down during the half-year.

25 – Financial charges and income The results of the Group’s financial management are summarised below:

(€'000) 1H 2013 1H 2012

Government grants 0 18

Sundry revenues 46 81

T o ta l o ther revenues 46 99

(€'000) 1H 2013 1H 2012

Amortisation of intangile assets 2,844 3,127

Amortisation of property, plant and equipment 586 650

T o ta l amo rt isat io n and deprec ia t io n 3,430 3,777

(€'000) 1H 2013 1H 2012

Exchange-rate losses 539 1,430

Interest expenses 347 529

Expenses on derivatives 101 72

Other f inance expenses 29 36

F inancial charges 1,016 2,067


50

The decrease in interest expenses is due to lower Group debt at 30 June 2013 compared with the same period a year earlier. The reduction in interest income was due to a decrease in available cash and a lower lending rate on deposits. The difference between exchange rate losses and gains was positive for €1,248 thousand, compared with a net positive effect of €92 thousand at 30 June 2012.

26 – Income tax for the period Income taxes at 30 June 2013 were positive for €3 thousand (of which €543 thousand for current taxes and €546 thousand for net deferred tax assets), compared with €305 thousand at 30 June 2012 (of which €614 thousand for current taxes and €919 thousand for net deferred tax assets), representing a negative change of €302 thousand.

Deferred tax assets amounted to €1.03 million at 30 June 2013 (€1.08 million at 31 December 2012). The provision for deferred tax totalled €7.91 million at 30 June 2013 (€9.49 million at 31 December 2012). The decrease mainly reflects the forex effect on values expressed in USD and JPY and relating to the PPA values, as well as the booking of deferred taxes in the period.

(€'000) 1H 2013 1H 2012

Exchange-rate gains 1,787 1,522

Interest income 8 19

Other f inance income 7 7

F inancial inco mes 1,802 1,548

(€'000) 1H 2013 1H 2012

IRES (Italian corporate income tax) 163 0

IRAP (Italian Regional business tax) 0 16

Foreign current income taxes 380 598

T o ta l current inco me tax 543 614

Net (prepaid) deferred taxes: Italy 36 (254)

Net (prepaid) deferred taxes: Non-italian (582) (665)

N et (prepa id) de ferred taxes (546) (919)

T OT A L IN C OM E T A XES (3) (305)


51

G – Other information

27 – Related-party transactions The condensed consolidated half-year financial statements include the half-year financial statements of Eurotech SpA and the half-year accounts of the subsidiaries shown in the following table:

Below we present related-party transactions not derecognised during consolidation, and compensation accrued in the period for Directors and Statutory Auditors for offices held in Eurotech SpA and in other consolidated companies, pursuant to Article 78 of Consob Regulation 11971/1999 as subsequently amended.

Name Locat ion Currency

% of ownership 30.06.2013

% of ownership 31.12.2012

Subsidiaries

Parvus Corp. United States USD 100.00% 100.00%

I.P.S. Sistemi Programmabili S.r.l. Italy Euro 100.00% 100.00%

ETH Lab S.r.l. Italy Euro 99.99% 99.99%

Eurotech France S.A.S. France Euro 100.00% 100.00%

Eurotech Ltd. UK GBP 100.00% 100.00%

E-Tech Inc. United States USD 100.00% 100.00%

Eurotech Inc. United States USD 100.00% 100.00%

ETH Devices S.r.o. Slovakia Euro 100.00% 100.00%

Saee S.r.l. (2) Italy Euro 100.00% 100.00%

Dynatem Inc. USA USD 100.00% 100.00%

Advanet Inc. Japan Yen 90,00% (1) 90,00% (1)

Affiliated companies

Chengdu Vantron Technologies Inc. China 45.00% 38.00%

Delos S.r.l. (2) Italy 40.00% 40.00%

eVS embedded Vision Systems S.r.l. Italy 24.00% 24.00%

Emilab S.r.l. Italy 24.82% 24.82%Rotow i Technologies S.p.A. in liquidation (ex U.T.R.I. S.p.A.) (2) Italy 21.32% 21.32%

(2) Company in liquidation

(1) The percentage of formal possession is 90%, but due to the possession by Advanet of 10% of the share capital in the form of treasury shares, it is fully consolidated

RELATED PARTIES Revenues to

related parties Interest to

related part ies Purchases f rom related part ies

Financial receivables to related parties

Receivables f rom related

part ies

Payables from related part ies

Associated companies

Chengdu Vantron Technology Inc 18 - 359 - 3 220

Emilab S.r.l. - - 55 - - 21

eVS embedded Vision Systems S.r.l. - - 2 - - 2

T o ta l 18 - 416 - 3 243

Other related parties

Wulfenia - - 9 - - 1

Finmeccanica Group 1,085 - 9 - 1,868 3

T o ta l 1,085 - 18 - 1,868 4


52

Lastly, the following is information on equity interests held in the company and its subsidiaries by members of the management and supervisory bodies, general managers and managers with strategic responsibilities, as well as by their spouses not legally separated and their minor children, directly or via companies controlled, trustee companies or via an interposed third party, as shown by the shareholder register, notifications received and other information acquired from the members of the management and supervisory bodies, general managers, and strategically accountable managers in compliance with the requirements of Article 79 of Consob Regulation 11971/19 99 as subsequently amended and Annex 3C of the same regulation.

Name Expiration Fees for the

appointment Other fees Benefits Bonus

Siagri Roberto In charge up to 31.12.2013

165 10 2 -

Tecchiolli Giampietro In charge up to 31.12.2013

110 10 1 -

Barazza Sandro In charge up to 31.12.2013

5 58 1 -

Bertolone Giovanni In charge up to 31.12.2013

5 - - -

Grasso Giancarlo In charge up to 31.12.2013

5 - - -

Mio Chiara In charge up to 31.12.2013

13 - - -

Pedicchio Maria Cristina In charge up to 31.12.2013

13 - - -

Pizzul Cesare In charge up to 31.12.2013

13 - - -

Soccodato Giovanni In charge up to 31.12.2013

5 - - -

Siciliotti Claudio In charge up to 31.12.2013

23 - - -

Cignolini Michela In charge up to 31.12.2013

15 - - -

Pingaro Giuseppe In charge up to 31.12.2013

15

TOTAL 387 78 4 -

at June 30, 2013

Nomination

Vice President - Director

President

Statutory Auditor

Director

Director

President of Board of Statutory Auditors

Director

Director

Director

Director

Director

Statutory Auditor

Name Company Possessory

title

Share at

January 1,

Share

acquired in

the period

Share

acquired in

the period

Share

disposed in the

period

Share at the

end of the

period

of w hich

shares at the

end of the

period

Siagri Roberto Eurotech Ow nership 2,320,531 - - - 2,320,531 1,040,371

Tecchiolli Giampietro Eurotech Ow nership 191,015 - - - 191,015 -

Barazza Sandro Eurotech Ow nership 2,000 - 2,000 -

Bertolone Giovanni Eurotech Ow nership - - - - - -

Grasso Giancarlo Eurotech Ow nership - - - - - -

Mio Chiara Eurotech Ow nership - - - - - -

Pedicchio Maria Cristina Eurotech Ow nership - - - - - -

Pizzul Cesare Eurotech Ow nership - - - - - -

Soccodato Giovanni Eurotech Ow nership - - - - - -

Siciliotti Claudio Eurotech Ow nership 20,000 - 20,000 10,000 (*)

Cignolini Michela Eurotech Ow nership - - - - - -

Pingaro Giuseppe Eurotech Ow nership - - - - - -

at June 30, 2013

President

Director

President of Board of Auditors

Statutory Auditor

Director

Director

Director

Statutory Auditor

(*) Shares ow ned indirectly by Pronet S.r.l.

Director

Director

Director

Director


53

28 – Financial risk management: objectives and criteria The Group’s financial instruments, other than derivative contracts, include bank loans in their various technical forms, finance leases, short-term and on-demand bank deposits, and trade payables. These instruments are intended to finance Group operations. The Group has several other receivable and payable financial instruments at its disposal, such as trade receivables arising from operations and liquidity. The Group also has derivative transactions in place, mainly interest rate swaps and collars. The objective is to manage interest rate risks caused by Group transactions and by its sources of finance. In accordance with Group policies, no speculative derivatives have been entered into. The main risks generated by the Group’s financial instruments are interest rate risk, liquidity risk, foreign exchange risk, and credit risk. The Board of Directors has reviewed and agreed to the policies for managing these risks, as summarised below. Interest rate risk Group exposure to the risk of interest rate fluctuations mainly involves medium-term obligations taken on by the Group, featuring variable interest rates linked to various indices. In previous years the Group signed interest rate swap contracts (some of which are ongoing) providing for recognition of a variable rate against payment of a fixed rate. This type of contract is designated to hedge changes in the interest rates in place on some loans. Group policy is to maintain between 30% and 60% of its loans at a fixed rate. As at 30 June 2013, not considering the loans already in place at the Japanese companies, for which the interest rate is limited, approximately 43% of Group loans had a fixed interest rate (in 2012 the percentage was also 45%). Exchange rate risk In view of the significant investment transactions in the US, Japan and the UK, with substantial foreign currency cash flows from business and financial operations, the Group’s financial statements could be significantly affected by changes in the USD/EUR, JPY/EUR and GBP/EUR exchange rates. In the reporting period, no foreign exchange hedges were executed because of the uneven USD, GBP and JPY flows, particularly taking into account that the individual subsidiaries tend to operate in their respective functional currencies in their respective core markets. About 81.2% of sales of goods and services (30 June 2012: 82.9%) and 72.6% (30 June 2012: 75.2%) of the cost of goods purchases and the operating costs of the Group are denominated in a different currency from the functional currency used by the Parent Company to draw up these condensed consolidated half-year financial statements. Product and component price risk Group exposure to price risk is not significant. Credit risk The Group trades only with known and reliable customers. The Group’s policy is to check the creditworthiness grade of customers that request extended payment arrangements. In addition, the balance of receivables is monitored during the year so that the amount of non-performing positions is not significant. Only some receivables from key customers are insured due to the reduction in the exposure granted by insurance companies in recent years. Financial assets are recognised in the financial statements net of write-downs calculated according to the risk of counterparty default, taking into account the information available on the customer's level of solvency and historical data. There is no significant concentration of credit risk in the Group.


54

Credit risk concerning other Group financial assets, which include cash and equivalents and financial instruments, presents a maximum risk equal to the book value of these assets in the event of insolvency of the counterparty. Liquidity risk The objective of the Group is to strike a balance between maintaining funds and flexibility through the use of overdrafts, loans, and finance leases, transferral of recourse factoring and, potentially, equity financing in the market. Group policy used to state that no more than 40% of loans could fall due within 12 months. At 30 June 2013, based on financial statement balances, 50.3% of the Group’s financial payables were due within one year (38.8% in 2012) based on the original plans. The level set out in Group policy has been exceeded as the maturities of medium/long-term loans approach. Management will explore the possibility of obtaining new loans with longer maturities with the banks. Fair value measurement and the relative hierarchical measurement levels All financial instruments recorded at fair value are classed within the following three categories: Level 1: market price Level 2: valuation techniques (based on observable market data) Level 3: valuation techniques (not based on observable market data) At 30 June 2013, the Group held the following financial instruments measured at fair value:

All the assets and liabilities measured at fair value at 30 June 2013 are at Level 2 of the fair value measurement scale. In addition, during the first six months of 2013 there were no transfers from Level 1 to Level 2 or Level 3, or vice versa.

29 – Financial and derivative instruments Fair value The book value and the fair value by category of all Group financial instruments booked in the financial statements do not show significant differences worth representing. The fair value of derivatives and of loans obtained has been calculated by discounting expected cash flows to present value applying prevailing interest rates. The fair value of other financial assets has been calculated using market interest rates. Interest rate risk Interest on financial instruments classified as variable-rate instruments is recalculated periodically during the financial year. Interest on financial instruments classified as fixed-rate instruments is kept constant until the maturity date of the instruments concerned.

(€'000)

Cash flow hedge

Contracts Interest Rate Sw ap (IRS) 5,809 0 (230) 7,095 0 (344)

Fair valute at

December 31,

2012 (credit)

Notional value

at June 30, 2013

Fair valute at

June 30, 2013

(debit)

Fair valute at

June 30, 2013

(credit)

National value at

December 31,

2012

Fair valute at

December 31,

2012 (debit)


55

Hedging Cash flow hedges As at 30 June 2013, the Group holds three interest rate swap contracts (for total notional residual amounts of €5.8 million) signed in previous years and during the current year, designated as instruments to hedge interest rate risk.

Due date Fixed rate Floating rate Market value (€'000)

Interest rate swap contracts € 571,428 30.06.14 2.21% Euribor 6 month (8) € 2,500,000 31.12.15 2.52% Euribor 6 month (74) € 2,737,732 30.12.15 4.08% Euribor 6 month (148)

Interest rate swap contract conditions were negotiated to coincide with the conditions of the underlying commitments. The accounting treatment of these financial instruments in the reporting period entailed an increase in shareholders’ equity of €114 thousand and decreased the cash flow hedge reserve as a direct reduction of equity to -€230 thousand in total.

30 – Events after the reporting period No significant events took place after the closing of the condensed consolidated half-year statements at 30 June 2013 other than those indicated in Note 31 to which reference should be made.

31 – IFRS 5 - Non-current assets held for sale and discontinued operations Over the last few years management has been called to analyse the possible valuation of its assets, especially its American ones, including through discontinued operations. In July 2013 the Board of Directors of Eurotech gave the Executive Directors the task of valuing the assets of the American subsidiary Parvus Corp at values not lower than a certain limit. This valuation resulted in a significant gain in view of the book value of the share holding and the capital invested in terms of the consolidated financial statements. Also, in relation to this process, which may be completed within the next twelve months, no binding offers have been received. As set out in IFRS 5 – Non-current assets held for sale and discontinued operations – since the criteria for the application of the standard (in particular the criterion contained in IFRS 5.7 – High probability of the sale and that of IFRS 5.8 – Top Management must be engaged in a scheme to sell) has been met after the end date of the half-year financial statements, in preparing these financial statements the group of net assets of the American subsidiary was not reclassified as “held for sale”, but the additional supplementary information required by the standard itself was provided. The 2013 and 2012 half-year results of the entity undergoing the valuation are summarised below:


56

Main classes of assets and liabilities of the asset under valuation as at 30 June 2013 and 31 december 2012 are as follows:

OPERATING RESULTS 1H 2013 1H 2013 1H 2012 1H 2012

(€/000) ($/000) (€/000) ($/000)

Revenues from sales of products and services

5,011 6,581 5,821 7,547

Cost of materials (1,931) (2,536) (2,488) (3,226)

Gross profit 3,080 4,045 3,333 4,321

Operating expenses (2,845) (3,737) (3,075) (3,987)

Other revenues 182 239 354 459

Profit before depreciation and amortization (EBITDA)

417 547 612 793

Depreciation & amortisation (268) (352) (126) (163)

Operating profit (EBIT) 149 195 486 630

Finance (expense) income 16 21 46 60

Profit before taxes from a discontinued operation

165 216 532 690

Income tax (67) (88) (203) (263)

Net profit (loss) from a discontinued operation

98 128 329 427

1H 2013 1H 2013 at December 31, at December 31,

(€/000) ($/000) (€/000) ($/000)

ASSETS

Intangible assets 2,078 2,718 2,109 2,655

Property, Plant and equipment 158 207 163 205

Other non-current assets 6 8 6 8

Inventories 2,223 2,908 950 1,196

Other current assets 4,279 5,597 5,178 6,519

Cash & cash equivalents 607 794 2,415 3,040

Assets classified as held for sale 9,351 12,232 10,821 13,623

LIABILITIES

Total non-current liabilities 723 946 735 925

Current liabilities 2,343 3,065 2,778 3,498

Liabilities directly associated w ith assets classified as held for sale

3,066 4,011 3,513 4,423

Net assets directly associated w ith disposal group

6,285 8,221 7,308 9,200


57

32 – Business seasonality The sector in which the Group operates does not feature any significant seasonal trends. However, the Group usually registers a greater concentration of revenues in the second part of the year. These higher sales are mainly due to customer scheduling. The trend has continued and is accentuated in the Group's current order book for financial year 2013.

Declaration of the Financial Reporting Manager Eurotech ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

58

Certification of the condensed consolidated half-ye ar financial statements Pursuant to Article 154-bis, Part IV, Title III, Chapter II, Section V-bis of Legislative Decree no. 58 of 24 February 1998: “Consolidated act on measures relating to financial intermediation, pursuant to Articles 8 and 21 of Law no. 52 of 6 February 1996”.

1) We the undersigned, Roberto Siagri, Chief Executive Officer, and Sandro Barazza, Corporate Financial Reporting Manager, of Eurotech SpA, hereby certify, also having taken into account the requirements of Article 154-bis, paragraphs 3 and 4, of Italian Legislative Decree no. 58 of 24 February 1998 [the Italian Consolidated Finance Act] as subsequently amended and supplemented: – the suitability in terms of the company’s characteristics and the effective application of administrative and

accounting procedures for the formation of the condensed consolidated half-year financial statements during the period from 01 January 2013 to 30 June 2013.

2) No significant aspects emerged in this respect. 3) We also certify that the condensed consolidated half-year financial statements:

a) correspond to the results in the corporate books and accounting records; b) were prepared in compliance with the international accounting standards (IFRSs) recognised in the

European Union pursuant to Regulation (CE) no. 1606/2002 of the European Parliament and Council, dated 19 July 2002;

c) provide a fair and true representation of the financial position and business performance of the set of entities included in the scope of consolidation.

4) The interim management report refers to the important events occurring in the first six months of the financial

year and to their impact on the condensed consolidated half-year financial statements, together with a description of the main risks and uncertainties for the remaining six months of the financial year, as well as information on significant related-party transactions.

Amaro (UD), 29 August 2013 Eurotech S.p.A. Signed Roberto Siagri Signed Sandro Barazza Chief Executive Officer Financial Reporting Manager

Independent auditor’s report Eurotech ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

59

Indipendent auditors’s report

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