Eurocontrol Reports Second Quarter 2016 Results and Provides Update

TORONTO, ONTARIO--(Marketwired - Aug. 29, 2016) - Eurocontrol Technics Group Inc. (TSX VENTURE:EUO)(OTCQB:EUCTF) ("Eurocontrol" or the "Company"), a Canadian public company specializing in the acquisition, development and commercialization of innovative security, authentication, verification and certification technologies, announces that it has filed its interim financial statements and Management's Discussion and Analysis ("MD&A") for the second quarter ended June 30, 2016.

The second quarter results reflect a 17% increase in fiscal year revenue, excluding discontinued operations, to $696,853 compared to $593,308 ($2,748,110 including discontinued operations) for the six month period ended June 30, 2016. The Company recognized EBITDA of $16,032,998 ($546,164 as at June 30, 2015) and a gain on the sale of its former subsidiary of $16,484,172 ($Nil in 2015) resulting in net income of $13,731,419 for the six months ending June 30, 2016 (net income of $439,460 in 2015). Included below is a summary table outlining earnings for the second quarter of 2016 compared to the corresponding 2015 period which is followed by a description of recent developments. Subsequent to the end of the second quarter, the Company received the first of the guaranteed earn-out payments of $750,000 from SICPA SA.

On January 4, 2016, the Company closed the sale of its wholly owned subsidiary, Global Fluids International (GFI) S.A. ("GFI") to SICPA Finance SA ("SICPA"), a subsidiary of SICPA SA, each a privately owned company based in Switzerland, in exchange for cash and post-closing earn-out payments and certain additional payments. In accordance with International Financial Reporting Standards ("IFRS"), the second quarter 2016 financial statements and MD&A are presented on an adjusted basis to include discontinued operations. For a reconciliation of discontinued operations, readers should refer to MD&A sections "Adjusted Revenue and Profit from Continuing Operations" and "Reconciliation of IFRS to Adjusted Results".

Operations Update

In addition to its core customer base, Xenemetrix has a long term supply and support agreement with SICPA to supply ED-XRF equipment to support Petromark™ fuel marking technology which relies on Xenemetrix ED-XRF technology to detect Petromark™ fuel markers. Sales in the first half of 2016 increased 17% to $696,853 over 2015. In the first half of 2016, Eurocontrol invested $581,210 in research and development to update existing Xenemetrix product lines, to develop new products and solutions for field applications and to enhance its manufacturing facilities and its quality control processes. This investment has been made to ensure that Xenemetrix maintains its position as a leader in the ED-XRF technology field and can continue to meet the high manufacturing and systems integration standards that its customers have come to expect. It is anticipated that sales for the balance of 2016 will remain consistent with 2015 revenue numbers with an increase anticipated in 2017 as SICPA gains market acceptance with its clients for the Petromark™ technology, the updated product line is rolled out and the expansion into the field of precision agriculture solidifies. Earlier this year, Xenemetrix announced that it had entered into a Memorandum of Understanding with Netafim, an Israeli company that is the global leader in drip and micro-irrigation solutions for Eurocontrol sustainable agricultural productivity, to develop a unique and innovative testing system utilizing Xenemetrix's ED-XRF technology for farmers and the greater farming community. Thus far the equipment solution and its calibration to the precision agriculture business has exceeded Netafim's test parameters. Field trials will commence in the second half of 2016 with a current view to commercialization mid 2017. Xenemetrix remains focused on the development of new applications for its ED-XRF and establishing new marketing and distribution agreements in various regions.

In the first half of 2016, Eurocontrol invested $1,038,635 in research and development in XwinSys towards the development of equipment that combines ED-XRF and automated 2D and 3D image processing technologies for use in the semiconductor and related microelectronics industries. Earlier in 2016, XwinSys announced the finalized integration of its NMT (Noise-reduced Multilayer Thin-film Measurement System) technology (featured in Solid State Technology magazine) to respond to the evolving metrology and inspection needs of the semiconductor industry due to the advent of 3D stacking structures for continued miniaturization of devices at an affordable cost. In May 2016, XwinSys was granted a US patent on this unique multi-mode technology system that meets both fast in-line and in- depth metrology challenges without interrupting process flow. The XwinSys solution overcomes limitations of current technology that is used to measure thin and ultra-thin films, which can be a single layer of atoms of a specific material, and are a critical component in the construction of advanced semiconductor devices. With the XwinSys solution now finalized and demos, including the unveiling of the technology at SEMICON West earlier this summer where significant interest was generated, the XwinSys team is making good progress towards commercialization of this disruptive technology that replaces the need for off-line analytical tasks.

Bruce Rowlands, Chairman and CEO stated, "Like the first quarter of this year, these results reflect operations without our former subsidiary GFI, as Eurocontrol continues a year of transition. Our planned investments in Xenemetrix's ED-XRF technology platform and XwinSys' patented hybrid microelectronics verification technologies, including the new 3D stacking verification system, introduced at SEMICON West in San Francisco last month are progressing well. We believe that these investments, our relationship with SICPA and our focus on acquisition opportunities will provide us with new technology, as well as new applications and markets."

Gilles Léraillé, a recently appointed Director of Eurocontrol and CEO and member of the board of SICPA Global Fluids Integrity stated, "Since the acquisition of GFI in early 2016, SICPA has been working to integrate the Petromark™ fuel marking solution into the broad portfolio of Track and Trace technologies which it is offering to governments. Synergies have been identified as foreseen at the time of acquisition and which should indeed have positive impact. With the support and the on-going improvements of the existing detectors by Xenemetrix, this should ensure for SICPA-GFI a continuing competitive edge."

Second Quarter 2016 Financial and Operating Highlights *

• Investment in R&D increased by 202% to $1,619,845
• Working Capital of $14,753,995 compared to $4,001,621 in December 31, 2015, a 269% increase
• The Company has no debt, compared to $975,741 in 2015
• Gross profit of $208,003 compared to $220,991 (does not include discontinued operations), a decrease of 6%
• Recognized EBITDA of $15,799,460 compared to $761,233 in 2015
• Recognized income of $13,731,419 compared to $439,460 for the 2016 six month period

			Three Months Ended June 30,				Six Months Ended June 30,
			2016		2015		2016		2015
			$		$		$		$
Revenue:
	- from continuing operations		394,180		266,711		696,853		593,308
	- from discontinued operations		-		1,450,979		-		3,055,681
Total revenue			394,180		1,717,690		696,853		3,648,989
Cost of sales:
	- from continuing operations
		Cost of sales - direct production costs	(227,616	)	(147,258	)	(400,153	)	(283,620	)
		Cost of sales - amortization and other non cash items	(44,348	)	(44,349	)	(88,697	)	(88,697	)
			(271,964	)	(191,607	)	(488,850	)	(372,317	)
	- from discontinued operations
		Cost of sales - direct production costs	-		(524,718	)	-		(1,024,020	)
		Cost of sales - amortization and other non cash items	-		(68,952	)	-		(137,905	)
			-		(593,670	)	-		(1,161,925	)
Gross profit - continuing operations			122,216		75,104		208,003		220,991
Gross profit - discontinued operations			-		857,309		-		1,893,756
Expenses - continuing operations			(1,746,322	)	(960,431	)	(3,701,353	)	(1,652,214	)
Expenses - discontinued operations			-		(205,390	)	-		(343,484	)
Other (expense) income - continuing operations			164,599		443,534		532,597		276,898
Other (expense) income - discontinued operations			-		(308,068	)	-		58,742
Income tax recovery - continuing operations			208,000		-		208,000		-
Income tax expense - discontinued operations			-		(8,864	)	-		(15,229	)
Gain on sale of subsidiary - discontinued operations			-		-		16,484,172		-
Net income (loss) - continuing operations			(1,251,507	)	(441,793	)	(2,752,753	)	(1,154,325	)
Net income (loss) - discontinued operations			-		334,987		16,484,172		1,593,785
Net income (loss)			(1,251,507	)	(106,806	)	13,731,419		439,460
EBITDA			(1,589,489	)	53,619		15,799,460		761,233
EBIT			(1,646,376	)	(81,913	)	15,686,304		487,907

About Eurocontrol Technics Group Inc.

Eurocontrol is a TSX Venture and OTCQB traded company that specializes in the acquisition, development and commercialization of innovative authentication, verification and certification technologies. Eurocontrol has two wholly owned subsidiaries, Xenemetrix Ltd. and XwinSys Technology Development Ltd. and an agreement with SICPA S.A. for earn-out payments of 5% (minimum $9 million) on revenues generated from the oil and gas marking and monitoring field relating to the sale of its former subsidiary Global Fluids International (GFI) S.A. Xenemetrix is a leading designer, manufacturer and marketer of ED-XRF systems, a technology that is the most accurate and economic method for determining the chemical composition of many types of materials, including the analysis of petroleum oils and fuel. Xenemetrix has an exclusive long-term supply, maintenance and support agreement with SICPA/GFI to supply SICPA/GFI with Xenemetrix products and services related to the oil and gas marking and monitoring field. XwinSys is in the final stage of developing a fully automated metrology system for the semiconductor industry that combines 2D and 3D image processing technology with Xenemetrix's ED-XRF technology.

For further information on Eurocontrol, please visit the Company's website at www.eurocontrol.ca.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.

Forward-Looking Statements:

This press release contains forward-looking statements. More particularly, this press release contains statements. Forward-looking statements are frequently characterized by words such as "plan", "expect", "project", "intend", "believe", anticipate", "estimate", "may", "will", "would", "potential", "proposed" and other similar words, or statements that certain events or conditions "may" or "will" occur. The forward-looking statements are based on certain key expectations and assumptions made by Eurocontrol. Although Eurocontrol believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because Eurocontrol can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. In addition to other risks that may affect the forward-looking statements in this press release are those set out in Eurocontrol's management discussion and analysis of the financial condition and results of operations for the quarter ended June 30, 2016 and the year ended December 31, 2015 which are available on the Corporation's profile at www.sedar.com. The forward-looking statements contained in this press release are made as of the date hereof and Eurocontrol undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.