EuroSite Power Reports 2016 Financial and Operational Performance
WALTHAM, Mass., March 31, 2017 /PRNewswire/ -- EuroSite Power Inc. (OTCPK: EUSP, the "Company") an On-Site Utility solutions provider, offering clean electricity, heat, hot water and cooling solutions to healthcare, hospitality, housing and leisure centers in the United Kingdom (UK) and Europe, reported a full year Gross profit of $287,355 for 2016 compared to a loss of $115,804 in 2015, an improvement of 348%. Total revenues increased to $2,476,186 for 2016 compared to $2,198,721 for 2015, an increase of 12.6%. Gross margin excluding depreciation improved by over 11.9 percentage points compared with 2015, to a strong 36.4%.
Commenting on the 2016 full year results Dr. Elias Samaras, Chief Executive Officer said "Our focus for 2016 was to improve gross margin and to implement our 'four pillar' strategy. We delivered these key objectives while also securing additional investment, all but eradicating debt and creating a platform for strategic expansion. Now fully independent and with an enhanced board, the recent decision to deregister our common stock further positions us for growth." He added, "While revenue grew strongly our new business activity was weak and will be a focus for 2017. Overall 2016 was a busy year for the team, but the foundations are now laid and EuroSite Power enters 2017 a stronger company with encouraging underlying momentum and positioned ready to deliver longer-term growth."
HEADLINES Improved margin and implemented "four pillars"
Gross margin excluding depreciation improved for the year ended December 31, 2016 to 36.4% as compared to 24.5% in 2015
Project finance facilities executed with both Macquarie Energy Finance and Societe Generale Equipment Finance
Hired and factory trained our in-house maintenance and operations team
Formed collaboration with TEDOM to sell On Site Utility solutions through their European dealer network
Secured first gas supply contracts in cooperation with Corona Energy
Fully separated from American DG Energy and operating independently
Financial and operational performance
Adjusted Non-GAAP EBITDA loss increased to $1,165,534 compared to a loss of $994,041 in 2015. This includes a $254,000 expense caused by foreign exchange variation following the fall in the value of the Pound after the Brexit vote in June 2016. Further adjusted to remove this expense the full-year 2016 Non-GAAP EBITDA loss was $971,534 compared to a loss of $994,041 in 2015.
Overall gross margin improved to 11.6% for the year of 2016, compared with a loss of 5.3%, an increase of 16.9 percentage points and an improvement of over 300%
Revenue increased by 12.6% to $2,476,186 (£1,822,073) for the year ended December 31, 2016 as compared to $2,198,721 (£1,464,541) for the year ended December 31, 2015. At functional GBP level revenues increased 24.4%.
GAAP diluted loss per share (EPS) was $0.03 for the year of 2016 as compared to a loss of $0.02 in 2015
The Company's management raised over $7 million in a series of private placements during the year
A portion of the private placement funds were used to repay the $2 million related party loan
After converting $2.1 million of the $2.4 million 4% Senior Convertible Debt, the Company is left with a small amount of debt of $300,000 as of December 31, 2016
Net loss includes one off debt conversion expense of $233,572
The operations team successfully delivered first Societe Generale funded project
Our total energy production increased by 32% to 38,073MWh for the year ended December 31, 2016 as compared to 2015
An additional 781kW of production was brought into operation during 2016
New On Site Utility contracts totalling 801kW were secured during the year of 2016
Outlook and 2017 targets – positive EBITDA, strategic growth and focus on new sales
UK operation was EBITDA cash flow positive for January & February 2017
Cost reductions expected from deregistration aimed at delivering positive EBITDA cash flows
Management has continued confidence in increased energy production and revenue growth, for example, January 2017 energy production was 23% higher than the same period in the prior year
Celtic Manor's 400kW system was commissioned late January 2017, bringing our operating fleet to 35 systems totalling 4,034kW
Strategic growth through acquisition is aimed at boosting both capacity and capability
Restructured business development includes staff recruitment and a focus on projects larger than 200kW, multi-site customers and more complex systems up to 2MW
Management plans to introduce alternate On Site Utility models and capital sale solutions to broaden market appeal while also aiming to secure our first continental European project
The changes and achievements during 2016 mean EuroSite Power enters 2017 an independent and arguably stronger company. With an operating fleet capable of delivering positive cash flows there is encouraging underlying momentum and the Company's primary target for the year is to achieve a positive EBITDA cash flow position.
Relative to 2016, the Company reports that there are however, a number of factors that could affect 2017 earnings. At a positive level these include the Company's larger operating fleet, its increasing use of larger electrically efficient TEDOM equipment and the positive effect of more units being maintained in-house. Less favourably there is some uncertainty around changes to the retail price spark spread through 2017 and the Company reports that any adverse pricing will likely adversely impact margins through the year.
Strategically, acquisitions remain a priority for the Company. While certain transactions proved unsuccessful in 2016 the Company has started the year with clear targets already in sight. These targets align the Company's overall aims of adding both capacity and capability to its existing operation.
Management recognises the weak performance of its new business development activity through 2016 together with the need to turn this situation around. Restructuring is already underway with the aim of creating a new business development team focused on larger systems.
Alternative Reporting Standard
The Company now files its financial statements under the Alternative Reporting Standard (ARS). Fiscal year end financial reports for the functional company, EuroSite Power Limited are audited by a PCAOB registered firm and the Company provides current information for the purposes of SEC Rules 144(c)(2) and 10b-5 using the OTC Disclosure & News Service.
EuroSite Power sells the energy produced from an onsite energy system to an individual property as an alternative to the outright sale of energy equipment. On-Site Utility solution customers only pay for the energy produced by the system and receive a guaranteed discount rate on the price of the energy. All system capital, installation, operating expenses and support are paid by EuroSite Power.
About EuroSite Power
The Company provides institutional, commercial and small industrial facilities with clean, reliable power, cooling, heat and hot water at lower costs than charged by conventional energy suppliers – without any capital or start-up costs to the energy user. More information can be found at www.eurositepower.co.uk.
This press release contains forward-looking statements under the Private Securities Litigation Reform Act of 1995 that involve a number of risks and uncertainties. Important factors could cause actual results to differ materially from those indicated by such forward-looking statements, as disclosed on the Company's website and in financial statements held by OTC markets for the fiscal year ended December 31, 2016. This press release does not constitute an offer to buy or sell securities by the Company, its subsidiaries or any associated party and is meant purely for informational purposes. The statements in this press release are made as of the date of this press release, even if subsequently made available by the Company on its website or otherwise. The Company does not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.
EUROSITE POWER INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
Cash and cash equivalents
Value added and other tax receivable
UK energy tax incentives receivable
Other current assets
Total current assets
Property and equipment, net
Other assets, long-term
LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued expenses and other current liabilities
Due to related party
Note payable - bank, short-term
Total current liabilities
Convertible debentures Due to related parties
Note payable - bank
Note payable - related party
Common Stock, $0.001 par value; 100,000,000 shares authorized; 82,265,056 and 65,747,100 issued and outstanding at December 31, 2016 and 2015, respectively
Additional paid-in capital
Total stockholders' equity
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
EUROSITE POWER INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS For the years ended December 31, (Unaudited)
Turnkey and other revenues
Cost of sales
Fuel, maintenance and installation
Gross profit (loss)
General and administrative
Loss from operations
Other income (expense)
Interest expense, net of debt premium amortization
Debt conversion expense
Loss before income taxes
Benefit for income taxes
Net loss per share - basic and diluted
Weighted-average shares outstanding - basic and diluted
Non-GAAP financial disclosure
Loss from operations
Stock based compensation
EUROSITE POWER INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the years ended December 31, (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Adjustments to reconcile net loss to net cash used in operating activities:
Non cash debt conversion expense
Non cash interest expense
Non-cash site impairments
Amortization of convertible debt premium
Changes in operating assets and liabilities
(Increase) decrease in:
Value added and other tax receivable
Accrued UK energy tax incentives
Prepaid and other current assets
Other assets, long term
Increase (decrease) in:
Due to related party
Accrued expenses and other current liabilities
Note payable - bank
Net cash used in operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of Common Stock net of costs
Payments on note payable - related party
Proceeds from loan payable - bank
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of the period
Cash and cash equivalents, end of the period
Supplemental disclosures of cash flows information:
Non-cash investing and financing activities:
Common Stock exchanged for convertibles debentures, non-cash
Conversion of convertibles to common shares, non-cash
Dr Elias Samaras is the founder, president and managing director of Digital Security Technologies S.A. He was also the founder and president of Plefsis Information Systems S.A. and City Messengers. Elias holds a Master of Science degree from MIT, a Doctor of Philosophy from Columbia University in New York, where he was also a professor for several years and an OPM from Harvard Business School.
Chief Operating Officer
Paul Hamblyn is Chief Operating Officer of EuroSite Power Ltd with responsibility for strategic and new business development of the business.Paul is highly experienced in the energy sector having built an enviable track record prior to joining EuroSite Power. This includes strategic level roles with Corona Energy and the ENER-G Group including 3 years as the Managing Director of ENER-G Efficiency.A leading expert on UK carbon regulation Paul is a regular speaker at major conferences including those organised by the Major Energy Users Council, the Local Government Association and the Westminster Energy Forum. He is also a formerCouncil Member of the Energy Services and Technology Association (ESTA). Paul is a CIBSE accredited Low Carbon Consultant and Energy Assessor as well as principal author of the award-winning CRC Toolkit developed for the London Energy Project.
UK General Manger
Chris Marsland is UK General Manger of EuroSite Power Ltd. He leads the UK operational company and directs its operational and administrative functions. Prior to joining Eurosite Power, Chris built up years of sector expertise in senior positions including the role of Technical Director at Centrica Business Solutions, formerly ENER-G Combined Power Limited. He also Chaired the Association for Decentralised Energy Commercial Forum and is an Association Board Member. Chris earned a first-class bachelor’s degree in electronic engineering and is both a Chartered Engineer and Fellow of the Institute of Engineering & Technology.
Financial Controller & Company Secretary
Laura Chambers is EuroSite Power Ltd’s Financial Controller and Company Secretary. An experienced finance professional, Laura has undertaken financial planning and analysis roles at number of blue-chip businesses including Astra Zeneca. She also spent 7 years at Kellogg’s European Finance Services Centre (EFSC). Qualified as a Chartered Accountant at KPMG’s Manchester office, Laura brings strong organisational skills and broad finance experience to the team.
Head of Operations
Stephen Butler is EuroSite Power Ltd’s Head of Operations. Having joined the company in 2012 as Chief Engineer, Stephen has moved through the business into his current role. With an impressive resume that includes senior mechanical engineering roles at Thames Water and ENER-G Combined Heat and Power Ltd, Stephen brings strong operational, project management and technical experience to the team. He is a Technician Member of the Institution of Engineering and Technology (TMIET).
UK Sales Manager
Martin Evans is our UK Sales Manager. A well-known and seasoned energy sector specialist, he brings a wealth of commercial experience - from start-ups to corporate level engagement – to our team. With a career spanning over 30 years, he has spent much of his career in technology led businesses and manufacturing including aviation and automotive. Martin’s previous roles at cutting-edge low carbon businesses including Grid Beyond, WEMS International and EnergyQuote JHA have given him a unique insight into the challenges faced by many of the UK’s most intensive energy users. He has also amassed over 15 years direct experience in commercial asset finance. Martin studied Applied Chemistry at the University of Manchester.
Mark Brown is our Account Manager. An experienced energy sector professional - particularly in the fields of CHP and renewable technologies - Mark has worked in engineering and technical roles for over 20 years. This includes 11 years at Cogenco UK (now fully integrated into Veolia’s CHP business). A great communicator with a positive approach to creative problem solving and troubleshooting, Mark is a key member of our customer-facing team. He holds qualifications from the Institute of Leadership and Management.
Jacques de Saussure
Non-Executive Chairman of the Board
Jacques de Saussure was Senior Managing Partner of the Pictet Group from 2010 until June 2016 after being elected partner of Pictet in 1987. Founded in Geneva in 1805, Pictet Group is one of Europe’s leading independent wealth and asset managers with EUR 437 billion of assets under management and custody as of 31 December 2015. Jacques is a member of the board of the Swiss Bankers Association and has also served as Vice Chairman of the Swiss Stock Exchange, which merged into SIX group in 2008, where he remained member of the board until 2010. Jacques holds a Master’s degree from MIT’s Sloan School of Management.
Dr Ahmed F. Ghoniem
Dr. Ahmed F. Ghoniem has been a member of our Board of Directors since January 2011. He is the Ronald C. Crane Professor of Mechanical Engineering at the Massachusetts Institute of Technology (MIT). He is also the director of the Center for 21st Century Energy and the head of Energy Science and Engineering at MIT, where he plays a leadership role in many energy-related activities, initiatives and programs. Ahmed holds a Ph.D. in Mechanical Engineering from the University of California, Berkeley, and an M.S. and B.S. in Mechanical Engineering from Cairo University.
Joan Giacinti is the founder and Chief Executive Officer of Sofratesa Group with headquarters in Santo Domingo, Dominican Republic. Joan is also a founder of Aerodom, a concessionaire chosen by the Dominican government to develop, operate and manage airports in the Dominican Republic, which in 2008 was acquired by Advent International. He is the President of the Caribbean region of the French Trade Councils, “Conseillers du Commerce Exterieur” and the President for the Americas of the Forum Francophone des Affaires (FFA). He is also decorated with the Ordre national du Mérite by the President of the French Republic. Joan is a graduate from the École des Hautes Études Commerciales de Paris (HEC).
Marcel Cassard joined Deutsche Bank in 1997 where he is now a member of the Global Markets Executive Committee and Global Head of Fixed Income and Economics Research. Marcel also heads the Bank’s Global Macro Strategy Group, which advises the Board and clients on broad market risks and global economic and financial developments. Previously, Marcel spent five years at the International Monetary Fund. Previous to that, he was an Economist at the Council of Economics Advisers in the Executive Office of the U.S. President. Marcel holds a PhD in Economics from Columbia University.
Mr. Stelios Zavvos
Stelios Zavvos is the Founder and CEO of Zeus Capital Management, a private equity group. With over 35 years of corporate, finance and real estate experience, Stelios is also the Founder and CEO of Continental American Capital, an investment group that focused on real estate investment and financing in the USA. He has served as a Member of the Board of Directors of the NASDAQ listed Star Bulk Carriers Corp, serving on the Board’s Audit Committee. He has also held executive positions in blue-chip companies such as Citibank, Johnson & Johnson and Procter & Gamble. SteliosZavvos holds an MBA from Harvard Business School and an MSc in Civil Engineering.