EuroSite Power Reports First Quarter 2018 Financial Performance
Positive cash flow continues and UK operation reports net profit
Moving to profitability is a major milestone for the UK business
MACCLESFIELD, UK, May 15, 2018 -- 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 first quarter revenues increased 58.7% to $ 1,318,454 compared to $830,849 for the first quarter 2017. Adjusted Non-GAAP EBITDA for the period ending March 31, 2018 was a positive $99,206, an increase of 1,375% year on year when compared to the $6,722 generated in the same period in 2017. Significantly the Company’s UK subsidiary delivered a net profit of £12,669 ($17,755) for the quarter compared to a net loss of £62,780 ($87,986), an improvement of 120% and the first time a profit has been reported.
“Moving to profitability is a major milestone for the UK business” explained Paul Hamblyn, Managing Director of the UK operating company. “Last year saw us achieve the critical mass needed to deliver positive cashflow and with new systems having come online and improved performance from the existing fleet we have been able to deliver a small but important profit.”
Speaking about the quarter’s results Dr. Elias Samaras, Chief Executive Officer said “Our key aim for 2018 was to be profitable, at least at the operational level. To have achieved this in the first quarter is great news but management need to remain vigilant as the warmer summer months traditionally squeeze margin and margin on the new turnkey project revenue stream has proven to be less than our traditional OSU business. Overall I am pleased with our progress and look forward to reporting greater progress in the months to come.”
The Company also announced that it had withdrawn from negotiations to acquire another UK based energy service company. Dr. Samaras explained “Investors know that we have been pursuing a key acquisition target over the past year, but in the end the intended transaction was not possible to conclude. The Board and management will now focus on growing the UK business organically while supporting the new Blue Grid Gas & Power joint venture in Greece, which appears to be a more promising alternative.”
UK net profit, strong revenue growth and continued positive operating cash flow
UK subsidiary delivered a net profit of £12,669 ($17,755) for the first quarter 2018 compared to a net loss of £62,780 ($87,986), an improvement of 120% year on year and the first time a profit has been reported
Total revenue increased 58.7% to $ 1,318,454 (£947,732) for the first quarter 2018 compared to $830,849 (£672,065) for the first quarter 2017, the result of both a 25.1% increase in energy revenue and new turnkey revenue
Overall gross profit including depreciation for the first quarter of 2018 increased to $305,337 compared to $199,623 in 2017, an improvement of 53.0%
Overall gross margin including depreciation decreased to 23.2% for Q1 2018, compared to 24% for Q1 2017
Overall gross margin excluding depreciation for the first quarter of 2018 increased to $447,856 compared to $332,242 in 2017, an improvement of 34.8%
Overall gross margin excluding depreciation decreased to 34.0% for Q1 2018 compared to 40% for Q1 2017, the result of lower margin turnkey projects
UK operating subsidiary achieved a positive EBITDA cash flow for the first quarter 2018 totalling £123,037 ($172,436) compared to £48,864 ($68,483) in 2017. This represents an increase of 151.7%
The Company achieved a positive adjusted Non-GAAP EBITDA for the first quarter 2018 of $99,206 compared to £6,722 in Q1 2017, an increase of 1375%
Additional financial headlines
Energy revenue increased to $1,036,556 (£745,098) for the first quarter 2018 compared to $828,893 (£672,065) for the same period last year, an increase of 25.1%
Gross margin excluding depreciation on energy revenue increased from 39.8% for the period ending March 31, 2017 to 44.5% for the same period in 2018, primarily due to lower maintenance costs as more Tedom units exit their warranty period allowing them to be maintained in-house
Total revenue generated by new turnkey projects was $281,898 in Q1 2018, but increased costs incurred on one project resulted in a $13,837 gross loss on turnkey projects. As this project is yet to be completed further losses are considered likely
An additional Capital Contribution totalling €500,000 ($616,241) was made to the Company’s joint venture, FCN Energy Logistics Limited to provide working capital for Blue Grid Gas & Power. This contribution was matched by our JV partners, Tamarindo Navigation S.A.
Liquidity and cash position at March 31, 2018 remained strong at $2,820,360
GAAP diluted loss per share (EPS) for the first quarter 2018 was $0.002 as compared to a loss of $0.003 in 2017
Total energy production increased by 5.3% to 14,047,471 kWh for quarter ended March 31, 2018 as compared to the same period in 2017
A single 70kW system at Strood Leisure Center was brought into operation during the first quarter 2018. In addition, the 101kW turnkey solution at Salt Ayre Leisure Centre was also handed over to the client
The 410kW system at Guildford Spectrum was also commissioned during the quarter but a fault with the alternator lead to handover being delayed until Q2. The alternator has now been changed by the manufacturer under warranty
Operational energy fleet capacity at March 31, 2018 was 36 systems at 33 sites totalling 4,074kW. This compares to 35 systems at 32 sites totalling 4,034kW at the end of March 2017
Contracted backlog at March 31, 2018 - 7 systems, 1,124kW. This includes the 410kW turnkey project at Guildford Spectrum
New business, strategic development and outlook
Closed 15-year Maintenance and Service Agreement to cover the new system at Salt Ayre Leisure Centre
The sales pipeline includes a number of larger solutions and multi-site opportunities as well as opportunities to develop a more diversified offer including technologies such as battery storage and trigeneration including absorption chilling and CHP systems
No new orders were closed during the quarter but since the quarter closed Heads of Terms have been agreed for two new projects and the sales pipeline includes a number of turnkey projects that management expect to close through the second quarter
The Company will be exhibiting at both the Edie.live and Sports & Leisure Forum event during the second quarter 2018
The Blue Grid Gas & Power joint venture has identified and issued proposals for 3 projects in the Thessaloniki region of Greece. In addition, the company’s application for a natural gas sales permit has been submitted to the relevant authorities
Management’s principal objective remains to deliver profitability at the UK operating company level in 2018
Recent announcements relating to proposed changes to the charging structure for electricity transmission and distribution costs plus changes to the CRC Energy Efficiency Scheme and Climate Change Levy have the potential to impact both revenue and margin of the Company’s OSU fleet
Management consider the overall outlook for financial performance in 2018 as good although it also highlights that risks remain in the form of future energy price changes and a narrowing spark spread, or unexpected equipment failures
The Company now files its financial statements under the Alternative Reporting Standard (ARS). Financial reports, which are prepared in accordance with US GAAP, are generally provided within 45 days of period end (90 days for fiscal year end results) and are reported to maintain at least the OTC Pink Limited Information tier.
Following corporate reorganisation and de-registration of the Company’s common stock, with effect from January 1, 2017 foreign exchange gains/losses are reported in the cumulative translation adjustment (CTA) account on the Company’s balance sheet.
Fiscal year-end financial reports for the operating 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. Financial statements for EuroSite Power Limited are prepared in accordance with UK GAAP, and consequently differences in accounting treatment and presentation may arise.
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, 2017. 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.
SOURCE: EuroSite Power Inc.
For further information: Dr Elias Samaras Chief Executive Officer +44 844 693 2848 firstname.lastname@example.org
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.