Eurocontrol Files Second Quarter Financials and Provides Further Information on SICPA Letter of Intent

TORONTO, ONTARIO--(Marketwired - Aug. 27, 2015) -

NOT FOR RELEASE IN THE UNITED STATES OR TO U.S. NEWS WIRE SERVICES.

Eurocontrol Technics Group Inc. (TSX VENTURE:EUO) ("Eurocontrol" or the "Company"), a Canadian public company specializing in the acquisition, development and commercialization of innovative energy security, authentication, verification and certification technologies, today filed its second quarter 2015 Financial Statements and Management's Discussion and Analysis.

The second quarter results include an increase in fiscal year revenue to $3,648,989 (US$2,957,041) compared to $2,890,171 (US$2,636,296) for the second quarter 2014, a 26% increase in Canadian Dollar sales which reflects a 12% increase in US dollar sales, with the remaining increase attributable to the increase in exchange rate. EBITDA for the six month period ended June 30, 2015 increased by $511,905 to $761,233 compared to $249,328 for 2014. The increase in EBITDA is primarily due to an increase in revenue and difference in product mix, as well as the increase in foreign exchange gains, offset by an increase in expenses, as discussed below. Following is a description of recent developments and outlook.

SUMMARIZED FINANCIAL RESULTS

		Three Months Ended June 30,				Six Months Ended June 30,
		2015		2014		2015		2014
		$		$		$		$
Revenue		1,717,690		1,470,691		3,648,989		2,890,171
Cost of sales:
	Cost of sales - direct production costs	(671,976	)	(637,870	)	(1,307,640	)	(1,264,362	)
	Cost of sales - amortization and other non cash items	(113,301	)	(113,301	)	(226,602	)	(226,602	)
Gross profit		932,413		719,520		2,114,747		1,399,207
Expenses		1,165,822		826,554		1,995,698		1,434,653
Other expense (income)		(135,466	)	34,252		(335,640	)	34,243
Income tax expense		8,864		(417	)	15,229		12,251
Net income (loss)		(106,807	)	(140,869	)	439,460		(81,940	)
Basic and fully diluted loss per share		(0.00	)	(0.00	)	0.00		(0.00	)
EBITDA		53,618		17,085		761,233		249,328
EBIT		(81,914	)	(116,660	)	487,907		(19,021	)

Bruce Rowlands, Chairman and Chief Executive Officer stated: "Our EBITDA in the quarter increased significantly compared to the same period in 2014 due to management's continued attention to cost control. The increase in sales and service revenue was led by fuel marking clients both in Tanzania and Uganda. We will continue to accelerate our growth strategy and we're looking forward to the finalization of the definitive agreement with SICPA."

2015 Financial and Operating Highlights *

• Achieved second half revenue of $3,648,989, an increase of 26% from 2014.
• Recognized record EBITDA of $761,233 compared to $249,328 in 2014, a 205% increase.
• Incurred a foreign exchange translation gain of $151,573 and $369,014 for the three and six month period ended June 30, 2015, respectively, compared to a loss of $9,402 and a gain of $16,926 for the three and six month period ended June 30, 2014, respectively.
• Achieved working capital of $2,231,938 compared to $1,640,429 in December 31, 2014.
• Research and development grants from the Israeli Office of the Chief Scientist amounted to approximately $289,000 during the six month period ended June 30, 2015, for investment in R&D towards developing EDXRF technology and automated 2D and 3D image processing technologies for the Semiconductor and related microelectronics industries.

Outlook

On August 18, 2015, the Company entered into a non-binding letter of intent (the "LOI") with SICPA Security Solutions SA, a private Swiss company that is a global provider of secured identification, traceability and authentication solutions and services, for the sale of Eurocontrol's 100% owned subsidiary, Global Fluids International S.A. ("GFI").

Amongst other terms, the LOI provides for a non-refundable deposit of $250,000 coincident with the signing of the LOI, an initial payment of $16 million to be received on the closing of the sale transaction, and a 5% royalty payment on all future GFI contracts, inclusive of both marker and logistics, for a period of six years with contracts signed during the fourth through sixth years being paid until the third anniversary of such contracts with a minimum guarantee of $1.5 million per year for six years.

It is intended that that parties will negotiate and enter into a definitive purchase and sale agreement within 30 days of the date of the LOI and that Eurocontrol will then call a special meeting of shareholders to approve the transaction. Closing of the transaction is subject to a number of conditions including for Eurocontrol, obtaining shareholder and TSX Venture Exchange approval.

Management believes that this transaction is a very positive step forward in the go-to market strategy for its GFI subsidiary. SICPA has a long established business with very significant reach within the security and authentication marketplace. Historically SICPA has been recognized as a force in the global market for bank notes having seen its security inks used in peseta notes since the 1940's. SICPA has evolved and benefitted from its development and deployment of a continuous stream of sophisticated new technologies in the identification, traceability and tax reconciliation verticals. SICPA has a significant presence in many markets that GFI has identified as potential targets for its Petromark™ solution. GFI will be able to leverage SICPA's extensive logistical expertise and customer base to expand its customer base, which Eurocontrol will benefit from in the form of a 5% royalty on all new marking technology sales and operational logistics for a minimum of six years from closing. Historically, Eurocontrol has been limited to revenue from the sale of fuel markers and analyzers/detectors. This agreement expands Eurocontrol's exposure to the fuel marking market significantly by now including operational logistics in the royalty stream. Logistics as a component of the over-all revenue derived from a comprehensive fuel marking program are generally a multiple of the revenue generated from sales of markers and detectors. The Company's other wholly owned subsidiary, Xenemetrix, will remain the supplier of detectors to SICPA / GFI on all new contracts entered into during the six year royalty period. The transaction, if approved, will provide Eurocontrol with approximately $16.0 million in cash, a minimum of $9.0 million in royalty payments over the next six years and two wholly-owned subsidiaries focused on growing their proprietary technology product offerings. Management is evaluating other potential investment opportunities that it anticipates will enhance the Company's growth profile and future profitability. In summary, management believes there are substantial benefits to this transaction, including the following:

• Enhanced exposure to the fuel marking market will provide royalties not only on the sale of the fuel marking technology but also on the implementation and operation of these programs on behalf of customers.
• Provides GFI with the ability to leverage the substantial reach and customer base of SICPA to deliver more contracts, more quickly.
• An increase in GFI's fuel marking business will result in more business for Xenemetrix's analyzer product line.
• A steady guaranteed future cash flow will support R&D to advance and commercialize new products at Xenemetrix, such as PetroMarine, and at XwinSys.
• Flexibility and financial capacity to broaden the Company's product line and opportunities through acquisition.

Gilles Léraillé, Executive Vice President, Business Development of SICPA stated, "I am confident that the identified synergies between SICPA and GFI will accelerate the acquisition of new markets to the benefit of both companies -- Eurocontrol due to royalties in-flow from GFI business and Xenemetrix through more substantial spectrometer production as a direct consequence. Worth noting too is the fact the GFI's turnover is mechanically going to grow significantly due to the fact that for the first time since its creation, its revenue will include the operational side of the oil marking contracts that represents on average a ratio of one-third / two-thirds in terms of turnover, the latter representing the operational component of the revenues."

Non-IFRS Measures

Earnings before interest, tax, depreciation and amortization ("EBITDA"), as presented in this press release, is not a recognized measure under International Financial Reporting Standards ("IFRS"). However, management believes that EBITDA is a useful supplementary measure to net earnings, as it provides investors with an indication of cash earnings prior to debt service, capital expenditure, income tax and non-cash items. Readers should be cautioned, however, that EBITDA should not be construed as an alternative to net earnings determined in accordance with IFRS as an indicator of the Company's performance or to cash flows from operating, investing and financing activities as a measure of liquidity or cash flows. The Company's method of calculating EBITDA may differ from the methods by which other companies calculate EBITDA and, accordingly, the EBITDA used herein may not be comparable to measures used by other companies. For further information relating to how Eurocontrol calculates EBITDA, including a reconciliation of EBITDA to net earnings, please refer to the Company's second quarter 2015 Management's Discussion and Analysis.

About SICPA

SICPA is a private Swiss company founded in 1927 as Société Industrielle et Commerciale de Produits Alimentaires" (Industrial and Commercial Food Products Company), the acronym SICPA has been utilized as the company name as the breadth of its services expanded. Originally involved in the production and supply of a special fat used in the milking of cows, SICPA moved into the field of security inks for currency printing in the early 1940's. Since then, SICPA has become a global provider of secured identification, traceability and authentication solutions and services. Every day, governments, companies and millions of people rely on SICPA to protect the integrity and value of their currency, personal identity, products and brands. Today SICPA is an international organization with technologies and services in more than 200 countries around the world, and 3,000 staff of over 50 nationalities. SICPA is a trusted security provider and adviser to governments, central banks, high-security printers and industry through its three global businesses - security inks, government security solutions and product and brand protection solutions. Additional information on SICPA can be obtained by visiting the SICPA website www.sicpa.com.

About Eurocontrol Technics Group Inc.

Eurocontrol through its three wholly owned subsidiaries, Global Fluids International S.A. ("GFI"), Xenemetrix Inc. ("Xenemetrix") and XwinSys Technology Development Ltd. ("XwinSys"), is a leading provider and innovator of detection and marking systems worldwide. GFI and Xenemetrix are global pioneers in developing and implementing innovative molecular marking systems for the oil industry and XwinSys is currently a development stage company. GFI's unique and proprietary liquid authentication system, Petromark™, is the world's leading solution for fully integrated oil marking, mixing and detection. Xenemetrix is a leading designer, manufacturer and marketer of energy-dispersive x-ray fluorescence ("EDXRF") 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. XwinSys is developing technology and intellectual property that will combine 2D and 3D image processing technology from Brossh Inspection Systems Ltd. of Israel with Xenemetrix's EDXRF technology for application in the semi-conductor manufacturing process.

NEITHER THE 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.

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 second quarter ended June 30, 2015 which is available 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.