EuroSite Power Reports 2018 Financial and Operational Performance
Increased revenue and gross profit continue to deliver positive cash flow
MACCLESFIELD, UK, March 28, 2019 -- 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 full year revenues increased 21.4% to $ 4,438,060 compared to $ 3,655,168 in 2017. Full year gross profits in 2018 increased by 45.9% to $ 1,051,116 when compared to $ 720,474 in 2017, the result of gross margin increasing from 19.7% during 2017 to 23.7% in 2018. Gross margin excluding depreciation and impairment for remained steady at 37.3%. Adjusted Non-GAAP EBITDA for the year ending December 31, 2018 was a positive $ 176,213, an increase of 404% when compared to the positive $ 34,944 in the year ending December 31, 2017. Significantly the Company’s UK subsidiary has now reported positive EBITDA in each of the 15 months ending December 31, 2018 and recorded net profits for 3 months of 2018.
Speaking about the Company’s full year results Dr Elias Samaras, Chief Executive Officer said “I am pleased that we remained cash positive and improved our net loss position again in 2018. It was also good to see the UK operating company achieve profitability in January, February and December last year. Investment is now focused on growing the business through 2019 by adding to our team, diversifying our offer and exploiting the opportunities presented by joining the London Stock Exchange’s ELITE programme.”
“Renewed attention on large multi-site opportunities dramatically increased our sales pipeline as 2018 ended and this bodes will for the year to come” explained Paul Hamblyn, Managing Director of the UK operating company. “While new business sales remained a challenge, improved fleet reliability and efficiency boosted energy production so enhancing both revenue and margin”.
Energy revenues grow alongside increased gross profit and positive operating cash flow
Total revenue increased 21.4% to $4,438,060 for the full year of 2018 compared to $3,655,168 for 2017
Overall gross profit including depreciation for 2018 increased to $1,051,116 compared to $720,474 in 2017, an improvement of 45.9%
Overall gross margin including depreciation increased to 23.7% for the twelve months ending December 31, 2018 compared to 19.7% for the same period in 2017
Overall gross margin excluding depreciation and impairment remained steady at 37.3% for 2018 compared to 37.2% in 2017
The net loss from operations for the year ending December 31, 2018 reduced 9.9% to $870,689, compared to $966,022 for year ending December 31, 2017
Non-GAAP EBITDA increased to a positive $176,213 for the full year of 2018, an increase of 404% when compared to the positive $34,944 achieved for the full year of 2017
UK operating company achieved gross profit in during January, February and December 2018
Additional financial headlines
Energy revenue increased by 19.8% to $3,787,045 in 2018 as compared to $3,160,666 in 2017
Turnkey revenue increased 35.8% to $651,015 in 2018 as compared to $479,302 in 2017
Liquidity and cash position at December 31, 2018 remained strong at $ $2,081,689
Full year 2018 GAAP diluted loss per share (EPS) was $0.01, the same as for 2017
UK government Enhanced Capital Allowance tax incentive expected to net approximately £20k ($25.4k) for year ending 2018. During the year, a total of £72,086 (c.$93,500) was received in relation to earlier year claims. This amount is lower as a result of reducing losses in the UK operating company combined with lower capital expenditure on construction of CHP systems during the year.
The Company invested $699,945, including a $572,288 capital contribution into a 50% Joint Venture called FCN Energy Logistics Limited. This JV is exploiting new market opportunities in Greece for both natural gas supplies and CHP solutions through its 100% owned subsidiary, Blue Grid Gas & Power
Total energy production increased by 12.4% to 55,490,051 kWh for the year ending December 31, 2018 as compared 49,374,475 kWh for the same period in 2017
Operational energy fleet capacity at year-end 2018 was 40 systems at 37 sites totalling 4,835kW compared to 34 systems at 32 sites totalling 3,905kW at the end of 2017
Contracted backlog at December 31, 2018 - 7 systems totalling 1,095kW
Temporarily decommissioned the 101kW solution installed at Riverside Hotel Irvine while the building undergoes refurbishment. This unit will be reinstated during Q2 2019
Achieved practical completion and secured long-term maintenance agreements for both Guildford Spectrum and Salt Ayre Leisure Centre turnkey projects
New business and strategic development
Signed two 15-year OSU agreements for a 350kW solution at the Ricoh Arena, Coventry and a 70kW at Dunstable Leisure Centre
Secured an $571,872 order to supply a turnkey 200kW TEDOM system for the Centre for Environment, Fisheries and Aquaculture Science laboratory in Weymouth, Dorset
Reviewed sales strategy to focus on large multi-site customers building a strong sales pipeline through development of a telemarketing led sales process. Pipeline now extends to over 320 potential systems at various stages of the sales cycle
Accepted on to London Stock Exchange’s ELITE programme, connecting growing companies with capital
Blue Gris Gas & Power JV secured its first OSU style agreement for a 355kW trigeneration scheme at the Genesis Hospital in Thessaloniki, Greece
Relocated to larger suite of offices to better support growth of the Company
Since January 2018 a further 15-year OSU agreement for a 100kW system at the International Convention Centre Wales has been closed
Outlook and risks
Management’s primary objective for 2019 is to secure new orders for at least 25 systems in the UK. In addition, management also aims to close at least one international sales opportunity
UK operating company has now delivered a net profit for three consecutive months – December 2018, January and February 2019. Management’s objective is to deliver profitability at the UK operating company level financial year 2019
The Company intends investing in expanding its team during 2019, including new personnel in both sales and operational roles.
Success of the Blue Grid Gas & Power Joint Venture remains a strategic focus for the year with management time and other resources being devoted to ensure its continued growth
Management consider the overall outlook for financial performance in 2019 as good although it highlights that risks remain in the form of future energy price changes and a narrowing spark spread, or unexpected equipment failures
The recent announcement by UK government to end the Enhance Capital Allowance scheme currently enjoyed by good quality CHP scheme will impact cash flow after the scheme ends in April 2020
EuroSite Power ended 2018 having achieved profitability at the UK operating company during January, February and December 2018. Management believe this achievement combined with the fact that it has maintained positive EBITDA at a UK level for 15 months demonstrates that sustained profitability is achievable in the short-term. Longer-term prospects depend on planned investment in the UK team and diversifying the company’s offer. Profitability is at risk due to the timing of these investments and the resultant deal flow and revenue generation.
Relative to 2018, the Company reports that there are a number of factors that could affect 2019 earnings. At a positive level these include the Company's ever-increasing operating fleet, the continued positive impact of more units being maintained in-house, rising utility prices and closure of the CRC Energy Efficiency Scheme and the resultant increase to Climate Change Levy rates. Less favourably there are already signs that the retail price spark spread is narrowing, and any adverse price changes will likely adversely impact margins through the year.
Continued uncertainty surrounding the UK’s departure from the European Union could lead to customer indecision, increased costs and disruption to planned project timelines. Management continue to monitor the situation and will seek to take whatever steps necessary to minimise any adverse effects.
Strategically, the joint venture with FCN Energy Logistics Limited had success and has built a pipeline of both CHP and LNG projects which will remain a priority for the Company. Other international sales opportunities are also being explored by the Company and management will be making the collaboration agreement with TEDOM a priority during 2019.
As previously announced, the Company intends to focus on organic growth but management will continue to maintain a watchful eye on any opportunities to acquire companies that align with the Company's overall aims by adding either capacity or capability to its existing operation.
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.