Connect Group: Sales of EUR 116.8 million in 2016

Jeroen Tuik (CEO): “In the 1st half, we were still involved in the restructuring resulting from the loss of ASML in our Dutch plant. The results achieved in the 2nd half show that we are on the right track. We are pleased that our strict cost control programme has produced results. Sales are on the rise again, and for the first time in many years we have achieved a good net profit of EUR 1.2 million. Our order book is also developing positively. Despite the loss of ASML (whose orders amounted to EUR 7.7 million at the end of 2015), orders have risen from EUR 86.6 million at the end of 2015 (including the EUR 7.7 million from ASML) to EUR 89.4 million at the end of 2016, constituting an increase of over 13 percent. As a result, we are entering 2017 on a positive note. Nevertheless, we are still not where we want to be, and more cost adjustments will be necessary in 2017 to further improve our profitability. We also need to invest in skill development in our plants in Romania and the Czech Republic to meet all customer demands.” The gross margin on sales increased from 9.2 to 11.9 percent, due to better cost containment and pricing. R&D, administrative and sales costs dropped 8 percent from EUR 11.3 million to EUR 10.5 million. Other operating income / expenses in 2015 totalled EUR ‐369'000, mainly due to the write‐off of receivables of EUR 465'000 and gains on selling fixed assets amounting to EUR 115'000. Other operating income / expenses in 2016 total EUR ‐282'000, this time mainly due to reversals / write‐offs of revenues from customers amounting to EUR 360'000 and an EUR 285'000 gain on the sale of a building, as well as lease costs totalling EUR 289'000 and a provision for litigation of EUR 650'000 The net financial result improved to EUR 260'000, mainly due to lower financing costs amounting to EUR 123'000 (through lower financing requirements due to the capital increase and a positive operating cash‐flow) and lower exchange losses (EUR 93'000). The group's net result thus improved from a loss of EUR 6'979'000 in 2015 to a profit of EUR 1'161'000 in 2016. The order book at the end of the 2016 financial year stood at EUR 89.4 million (against EUR 86.6 million at the end of 2015). Outlook for 2017 The current economic climate makes it difficult to establish clear expectations for 2017. Connect Group is positive about its position with its current and new customers and expects a further positive impact in 2017 of the restructuring and other measures taken in 2016, but as a subcontractor, Connect Group remains largely dependent on the general evolution of its customers.