EuroSite Power Announces 2021 Financial and Operational Performance
EBITDA $655K for FY2021 after UK operating company delivers full year net profit
Achieving profit at least at the UK level was our goal this year and we are delighted to have achieved this
DERBY, UK, March 31, 2022 -- 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, continued its trend of improving EBITDA performance after it reported a full year positive EBITDA of $655,013 in 2021, an increase of 167.9% compared to the positive $244,525 reported in 2020. This followed a strong performance by the UK operating company that saw it deliver full year net profits for the first time, reporting profits of £132,789 ($179,688) at the UK level for FY2021. This compares to a net loss of £68,377 ($93,314) for FY2020, representing an increase of 294.2%.
Full year 2021 revenues increased 34.9% to $4,441,965 from $3,292,061 in 2020 and falling just short of the Company’s record high of $4,472,635 reported in 2019. This was despite COVID restrictions affecting many sites in the first half of the year. Importantly full year gross margin also increased, rising 3.3 percentage points to 29.8% although when excluding depreciation gross margin increased further still to 47.5% in 2021 as compared to 45.5% in 2020, largely the result of increased spark spread in the earlier part of the year. While the Company still reported a net loss of $137,987 for FY2021 this is a 65.7% improvement compared to the $402,488 loss reported for FY2020.
“Achieving profit at least at the UK level was our goal this year and I am delighted to have achieved this” said Paul Hamblyn, Chief Operating Officer and Managing Director of the UK operating company. “The next step is to do the same at the consolidated level and given that COVID impacted our ability to generate last year I am more confident than ever that we can achieve this.”
Speaking about the Company’s full year results Dr Elias Samaras, Chief Executive Officer said “The last two years have been challenging but yet we were able to reduce our losses even further while also delivering profitability at the UK level. This bodes well for the future, but I must also acknowledge the challenges ahead - COVID continues to impact our customers, supply chains remain stretched and now volatile energy prices are another risk to manage. That said I remind investors that our revenue will go up as underlying energy prices increase and although a reducing spark spread does lower our margin, this is largely mitigated by a heat price set in reference to the gas price. In addition, the cash we can generate from a reduced margin on an increasing revenue remains strong and so we look forward to continuing to deliver profits.”
Full year positive EBITDA, UK level profit and reduced losses
Full year EBITDA increased to a positive $655,013 in 2021 compared to a positive $244,525 in 2020, an increase of 167.9% and the second year running that the Company has reported a full year positive EBITDA
Full year non-GAAP EBITDA increased to a positive $667,013 in 2021, up 153.5% on the positive $263,117 reported for the full year of 2020
Full year net profits for the UK operating company were £132,789 ($179,688) for 2021, up 294.2% from the net loss of £68,377 ($93,314) reported in 2020
The net loss from operations for the year ending December 31, 2021 reduced 65.7% to $137,789, compared to $402,488 for the year ending December 31, 2020
Total revenue increased 34.9% to $4,441,965 for the full year of 2020 compared to $ 3,292,061 for 2020
Energy revenue increased 36.2% to $4,411,770 for the year ending December 31, 2021 compared to $3,239,172 for the same period in 2020. This result beats the previous high of $4,192,482 set in 2019, an increase of $219,288 or 5.2%. Full year turnkey revenues fell from $52,889 in 2020 to $30,195 in 2021
Overall gross profit including depreciation for 2021 increased to $1,323,726 compared to $873,547 in 2020, a rise of 51.5%
Overall gross margin including depreciation increased to 29.8% from 26.5% while gross margin excluding depreciation and impairment improved to 47.5% for 2021 compared to 45.5% in 2020
Additional financial headlines
Liquidity and cash position at December 31, 2021 remained strong at $2,039,265, up 5.9% on the cash held last year
Full year 2021 GAAP diluted loss per share (EPS) was $0.002, an improvement over the $0.005 loss per share reported in 2020 and continuing the improvement first seen in 2019
The UK operating company benefited from pandemic related grants totalling £25,326 ($34,270) all of which related to the UK government’s Coronavirus Job Retention Scheme that supported furloughed staff. These grants do no need to be repaid
In December 2021 the Company opted not to participate in an additional capital raise offered by its subsidiary undertaking, Cyprus based FCN Energy Logistics Limited (“FCN”), parent company and sole owner of Blue Grid Gas and Power S.A., as a result the Company’s shareholding reduced to 23.3% but it retains a seat on the board of Blue Grid Gas and Power S.A.
Total energy production increased by 16.6% to 48,221,416 kWh for the year ending December 31, 2021 as compared 41,355,788 kWh for the same period in 2020. This was directly attributable to sites being able to reopen following government COVID restrictions being eased although this is remains below levels achieved pre-COVID in 2019
Operational fleet capacity at year-end 2021 was 46 systems at 43 sites totalling 5,810kW compared to 47 systems at 45 sites totalling 5,911kWe at the end of 2020. Of these 44 systems totalling 5,194kWe are under contract as On-Site Utility Solutions with the remaining 2 systems owned by customers but maintained by the Company
The Company brought into operation a single system of 101kW during 2021. This was the final system of five contracted to the Club Company and was installed at the Tytherington Golf and Country Club. There is no current backlog
Two systems were removed by the Company during 2021. These were the 101kW unit installed at the Brentwood Centre and a further 101kW unit at Salt Ayre Leisure Centre. The Brentwood Centre unit was under an OSU contract and its removal followed a customer insolvency, but as the project was funded by Close Leasing the Company suffered no financial loss. The Salt Ayre unit was removed at the customer’s request after its decision to stop using fossil fuelled equipment for heating its buildings. As this unit was owned by the customer the Company suffered no loss as result of its removal. In both cases the CHP units remain available to the Company for redeployment
UK business development
The Company launched its new Green CHP offer in July last year. This innovative solution to further decarbonise CHP is helping the Company to pivot its business development activity towards new sectors such as FMCG and other industrial users. It also resulted in the Company being shortlisted for the Net Zero Impact Award at the Energy Innovation Awards 2022, the winner of which will be announced in May
Business development activities were severely restricted due to COVID but a new Business Development Manager was hired in November and work is underway to build an expanded sales pipeline across multiple sectors including leisure, hospitality, healthcare, industrial and manufacturing
The Company signed a term sheet with an existing customer to replace its existing 4 CHP systems with new, higher efficiency units plus new solar PV and EV charging systems for each site. Once finalised these systems will be operated under the terms of new 15-year On Site Utility agreements
The Company signed a term sheet with a new project funder to provide funding for its range of on site energy generation solutions. Once finalised this agreement will replace the facility withdrawn by Societe Generale during 2021
European business development
The Company opted not to participate in an additional capital raise by Cyprus based FCN Energy Logistics Limited, in which it holds a minority share. As a result, it now holds a 23.3%, down from the 27.8% stake held on 31 December, 2020. FCN Energy Logistics Limited continues to hold 98.5% of Blue Grid & Power S.A. in Greece
In the Industrial Sector, Blue Grid signed an additional contract for supplying LNG to an Industrial Customer in Greece, making this the 2nd Greek and 3rd overall supply contract in its portfolio
In February 2021 Blue Grid successfully set up a joint venture with the Elin group, one of the leading fuel retailers in Greece, for the development of the region’s first LNG road-fuelling stations. The joint company will operate under the trade name Blue Fuel and aims to complete the first phase of its development plan, consisting of 3 fuel stations in Greece by the first quarter of 2023
Blue Grid continues to make steps in establishing itself as a leading marine bunkering supplier of LNG in the Eastern Mediterranean region. To that end, Blue Grid has signed letters of intent and memorandums of understanding with leading maritime companies in the cruise, passenger, and merchant shipping sectors, operating vessels which utilize the port of Piraeus as well as other prominent Eastern Mediterranean ports
Aiming for regional growth, in June 2021, Blue Grid incorporated LNG Blue, an affiliated partnership based in Belgrade, Serbia, with local partners active in the natural gas infrastructure business. Relying on Blue Grid’s know-how in LNG and marketing expertise, and in combination with the advantages of a local presence, LNG Blue aims to lead the development of Industrial LNG sales in the countries of Serbia, Montenegro, Albania, Croatia, and North Macedonia.
In what Management view as a strong vote of confidence in Blue Grid’s activity to date and its potential going forward, the shareholders of FCN Energy Logistics Limited have concluded commercial terms with regards to a significant investment by the largest downstream LNG supplier in Europe, Molgas Energy Holdings, owned by French private equity firm InfraVia Capital Partners. Following Molgas’ investment, Blue Grid will focus on accelerating growth in LNG and bioLNG supply in the broader region of SE Europe and the Eastern Mediterranean
Outlook and risks
The Company reports that the outlook for 2022 appears good with increased revenue expected as underlying energy prices rise through the coming year. Now the UK operating company has delivered a net profit Management expects this both to continue and grow and the aim for 2022 is to deliver similar profitability at the consolidated level
Some operational challenges remain. For example, Management reports that although most existing customer sites have now reopened following the restrictions imposed by COVID during 2021, two sites remain closed as customers take the opportunity to refurbish existing facilities. In addition, although open some sites continue to experience lower occupancy rates and/or footfall and this is affecting demand at some of these sites. Finally, supply chain problems, particularly relating to the timely availability of certain spare parts has and could continue to cause extended downtime of units that develop a fault and require repair. In response Management has sought to increase the inventory of parts being held but the nature of the CHP equipment in uses means that it is not always possible to hold stock in reserve
The large increase in wholesale gas and electricity prices are yet to feed through to the retail prices paid by the Company’s customers, although as individual customers’ fixed rate contracts end the Company expects that retail prices will increase. Rising energy prices will increase revenue as all On Site Utility customers are charged heat and power tariffs based on a fixed discount applied to their underlying retail price of gas and electricity. Similarly, the cost of sale will increase as gas prices rise but unless the ratio between the cost of gas and electricity (known as the spark spread) narrows significantly a margin can always be maintained. The Company does, however, expect gross margin to reduce in the coming year although with rising revenues gross profits could still rise
The accelerating need to reduce reliance on imported fossil fuels while also delivering on net zero targets is an opportunity and is creating strong interest however, natural gas-fuelled CHP remains disadvantaged compared to the electrification of heat using heat pumps and while support for heat networks is being encouraged. Alongside other market participants and trade associations, Management is engaged in lobbying for a stronger role for CHP, but it also continues to develop alternate technical and commercial solutions
Management believes that its investment in Blue Grid Gas and Power will not now deliver benefits until the final part of this year at the earliest, a direct effect of a volatile gas market
Other risks remain in the form of the availability of project credit, the impact of reducing grid electricity carbon emissions on future sales, a possible shift in government energy policy in response to the Ukrainian crisis 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, 2021. 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.
For further information: Elias Samaras - CEO
+44 800 028 8001
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.