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.
Future News Releases
News provided all financial results and news are only published on the Company’s website (http://investors.eurositepower.co.uk/news-releases).
Anyone wishing to receive notice of a news release should subscribe to the email alerts service provided within the Company’s investors pages (http://investors.eurositepower.co.uk/email-alerts).
Alternative Reporting Standard
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.