DERBY, UK, May 12, 2021 -- 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, report a 63% increase in first quarter 2021 EBITDA compared to the same quarter last year. EBITDA for the quarter totalled $ 122,799, up from the $ 75,344 reported for the first quarter 2020. This was despite UK government restrictions being reimposed early in January, restrictions that resulted in most of the Company’s hotel and leisure center customers being forced to close their sites; an action that reduced first quarter revenues from $ 1,145,978 in 2020 to $ 832,988 this year, a reduction of 27.3%. As a result, gross profits were also impacted with first quarter 2021 gross profits reducing to $ 212,570 at a margin of 25.52% compared to $ 384,700 at 33.57% during the first quarter of 2020.

Over half of the Company’s generation assets were forced to switch off from January 5, 2021 and remained off throughout the first quarter however, the UK’s roadmap to recovery saw leisure center sites restart shortly after the quarter ended. In fact, the Company reports that daily generation totals are now exceeding the seasonal norm and with most hotels expected to be back operating by the end of the second quarter the Company believes this trend will continue.  

Speaking about the first quarter Chief Executive Officer, Dr Elias Samaras said “Lockdown restarting in the UK was a blow to us and our customers. Generation was down throughout the quarter and while the winter weather helped a little, we still saw revenues fall although we still maintained a positive EBITDA both within the UK company and at a corporate level while also maintaining a strong cash position ready to rebuild once lockdown eases”. 

“Twenty-four of our forty-six sites had to close in the first week of January so once again our focus shifted to maximising output from the remaining sites while minimising our expenses and managing cash flow. Fortunately, the sites remaining operational tended to be larger systems so generation held up quite well and when sports and leisure clubs were able to reopen in April we immediately saw generation return to pre-pandemic levels” said Paul Hamblyn, Chief Operating Officer and Managing Director. “Mid-May will see our hotel sites reopen and most customers are optimistic about the summer ahead. It is also good to see new business enquiries return, with demand for solar PV systems leading the way. We have also begun work on a new Green CHP offer designed to address the need for natural gas CHP to compete in a market increasingly driven by the electrification of heat and rumours of hydrogen replacing natural gas” he added.

Beyond the UK the Company reported that the first quarter also saw Blue Grid Gas and Power S.A., a natural gas retailer in Greece owned by Cyprus based FCN Energy Logistics Limited in which the Company holds a minority interest, sign two new agreements for the delivery of Liquid Natural Gas (“LNG”) to final customers. The first of these contracts will not deliver revenue until the first quarter 2022, but this will follow initial revenues from a further contract that will start delivering in the fourth quarter this year. Additionally, the new BlueFuel joint venture agreed with Elinoil is busy developing LNG road-fuelling stations providing nation-wide coverage of LNG supply for heavy goods vehicles (trucks) and buses across the region.

HEADLINES
COVID restrictions impact all metrics but recuring revenue business model ensures positive EBITDA is maintained

• Overall gross margin excluding depreciation increased to 49.28% for the first quarter of this year compared to 46.26% for the same quarter in 2020, the result of increased spark spread caused by lower gas prices
• Overall gross margin including depreciation decreased to 25.52% for Q1 2021 compared to 33.57% for Q1 2020, the result of increased depreciation costs due to the Company’s enlarged fleet set against lower revenue caused by the impact of COVID restrictions
• Total revenue decreased 27.31% to $ 832,988 for the first quarter of 2021 compared to $ 1,145,978 for same quarter in 2020, the result of many sites being forced to close due to renewed COVID restrictions in the UK
• Overall gross profit including depreciation for the first quarter 2021 decreased by 44.74% to $ 212,570 compared to $ 384,700 in the first quarter of 2020, a reflection of the lower revenue and increased cost of depreciation reported this year
• Operating expenses fell to $ 289,196 during Q1 2021, a reduction of 36.68% compared to the $ 456,751 reported in Q1 2020
• The net loss for the first quarter 2021 of $ 104,969 compared to a net loss of $ 87,968 for the first quarter 2020, a decline of 19.33%
• EBITDA cash flow for the first quarter 2021 was positive at $ 122,799 compared to a positive $ 75,334 in Q1 2020, an improvement of 63.01%
• The UK operating company continued to report a net profit in January 2021 but falling revenues in February and March resulted in a net loss of £ 27,208 for the quarter compared to a £ 18,679 profit for the first quarter 2020.
• EBITDA cash flow for the UK operating company for the first quarter 2021 was positive at £ 128,097 compared to positive £144,982 recorded for the same quarter last year, a decline of 11.54%
• Liquidity and cash position on March 31, 2021 was $ 2,060,011. This represents an increase of $ 1,363,965 on the cash balance on March 31, 2020, the result of both enhanced cash management and the drawn down of funding for a number of projects completed during 2020
• The UK operating company has promptly filed its 2020 annual tax return in order to claim a £ 100,819
  ($ 138,969) cash rebate under the terms of the Enhance Capital Allowances scheme, an investment incentive created by the UK government to support low-carbon energy technologies like combined heat and power systems. As this scheme has now closed this will be the last such rebate received by the Company. Payment is expected during the second quarter

Operational performance

• Total energy production decreased by 30.29% to 10,277,608 kWh for quarter ended March 31, 2021 as compared to the same period in 2020, the direct result of site closures caused by renewed lockdown measures in the UK  
• Operational fleet capacity at March 31, 2021 was 48 systems at 45 sites totalling 6,012kW (of which 717kW are non-OSU systems maintained for others). This compares to 40 systems at 38 sites totalling 5,100kW (717kW non-OSU) at the end of March 2020. With this increase fleet the Company expects generation output to higher than historic seasonal norms once lockdown measures ease
• The final 100kW unit for the Club Company at their Tytherington club was brought into operation during the quarter
• There was no contracted backlog at March 31, 2021

New business and strategic development

• The Company extended its contract with Coca Cola HBC for a further year and is currently working with the client to develop a number of energy efficiency projects at its site in Northern Ireland. Once fully developed the Company expects to receive further orders to fund and implement these projects    
• A new On-Site Utility offer has been developed specifically for sites requiring solar PV solutions
• The Company has bid a number of public tenders to deliver a range of technologies including combined heat and power, solar PV and heat pumps. As yet none of these bids have proven successful but many remain to be awarded. The Company continues to bid public tenders it identifies
• Management is developing a new Green CHP offer designed to address the need for natural gas CHP to compete in a market increasingly driven by the electrification of heat and rumours of hydrogen replacing natural gas. This offer will be brought to market during the second quarter
• Blue Grid Gas and Power S.A., owned by Cyprus based FCN Energy Logistics Limited in which the Company holds a minority interest , signed two new agreements for the delivery of Liquid Natural Gas ("LNG") to final customers during the first quarter of this year. The first is to supply 4,000 tonnes of LNG per annum over a 5-yesar period and is expected to start delivering revenue early in 2022. The second is a Joint Venture to develop LNG road-fuelling stations with ELINOIL, one of the leading independent fuels suppliers and traders in Greece. The new Joint Venture will be called BlueFuel

COVID crisis - other impacts and response

• UK operating expenses continue to be lower, the result of UK staff members continuing to work from home, reduced corporate travel and lower/subsidised payroll costs
• All UK directors and other staff remained subject to a 10% temporary pay cut throughout the first quarter 2021
• Some UK staff members remain on a flexible furlough arrangement supported through a grant funded under the UK government’s Coronavirus Job Retention Scheme. This arrangement will continue until September 30, 2021
• Project funding from the Company’s current pool of funders has become restricted and so management has begun seeking alternative funders. Alternative funding options, including the refinancing of the Company’s existing book of self-funded projects is also being considered   

Outlook and risks

• The UK government has published a roadmap that sees lockdown restrictions easing over the next few months. Sports and leisure facilities reopened on April 12 and hotels are scheduled to open again on May 17. Remaining restrictions should then ease on June 21, but all these steps are subject to the success of the UK’s vaccination program and continued progress in terms of infection and hospitalisation rates
• Management reports an increase in generation output since the reopening of sports and leisure centers, an increase that has already exceeded the output delivered during the same period in 2019, the most recent year unaffected by COVID. Despite this, management still consider the outlook for 2021 to be uncertain
• The UK operating company achieved gross profit in 8 of the past 15 months, the result of the Company’s larger operating fleet and improved gross margins. As lockdown restrictions ease management expect to see a return to profitability although it remains uncertain as to whether or not the UK operating company will be profitable for the 2021 financial year
• Blue Grid Gas & Power are expected to generate initial revenues this year before additional revenues are delivered in 2022
• Management consider the overall outlook in 2021 to be uncertain

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.

On-Site Utility (OSU)

EuroSite Power sells the energy produced from an on-site 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 electricity or total energy produced by the system and receive either a guaranteed discount rate on the price of total energy or a fixed price for electricity. All system capital, installation, system maintenance and support are paid by EuroSite Power, and in the case of No Risk On-Site Utility solution customers all system fuel costs are also 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.

FORWARD-LOOKING STATEMENTS

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, 2020. 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.