DERBY, UK, May 12, 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, reported net profits of $22,983 for the first quarter of 2022, the first time the Company has reported a net profit, representing 122% improvement on the net loss of £104,969 reported for the first quarter of 2021. Revenues also increased by 91% to $1,588,338 compared to the $832,988 reported in Q1 last year. This continues the improving trend initially reported towards the end of 2020 and through 2021.

Commenting on the Company’s results Dr Elias Samaras, Chief Executive Officer said, “After the UK operation moved into profit last year our goal was to deliver profits at the consolidated level, and I am more than pleased to see this happen so soon in the year”. He continued, “Yes the profit is small, but we have to start somewhere and although I am sure there are some challenges ahead, I think we can all take confidence from the achievements of the first quarter”.

“Energy price rises are only now beginning to flow through to our customers and our revenues are responding accordingly, but margins are reducing as the rising gas price squeezes the spark spread, ” said Paul Hamblyn, Chief Operating Officer and Managing Director of the UK operating company. He added, “I expect margins to continue to get squeezed as the full effect of the recent gas price increases hit our customer’s energy bills. We are also beginning to see the impact of supply chain issues and labour shortages hit fleet performance, but with the steps we’ve taken we aim to minimise these as much as we can. Time will tell, but I look forward to continuing to report good results throughout 2022”.   

HEADLINES
First quarter Net Profit, continued positive EBITDA and strong liquidity

• First quarter Net Profit of $22,983 in 2022 as compared to a Net Loss of $104,969 in quarter one of 2021, an improvement of 122%
• EBIT or the gain from operations for the first quarter 2022 increased 197% to $74,035 from a loss of $76,626 in Q1 of 2021
• First quarter EBITDA increased to $264,463, compared to $122,799 in the first quarter of 2021, an increase of 115%
• Q1 2022 net profits for the UK operating company were £79,029 ($106,041), up 390% from the net loss of £27,208 ($37,503) reported in Q1 2021
• Total revenue increased 91% to $1,588,338 for the first quarter of 2022 compared to $832,988 for the same period in 2021. This was largely due to the first quarter of 2021 being affected by COVID lockdown measures that did not apply this year
• Overall gross profit including depreciation for Q1 2022 increased to $490,303 compared to $212,570 for Q1 2021, a rise of 130%
• Overall gross margin including depreciation increased to 30.9% from 25.5% while gross margin excluding depreciation and impairment reduced to 42.8% for Q1 2022 compared to 49.3% for Q1 2021
• Liquidity and cash position at March 31, 2022 remained strong at $1,954,542, down 5.1% on the cash held at March 31,2021
• Q1 2022 GAAP diluted net gain per share (EPS) was $0.0003, an improvement over the $0.001 loss per share reported in Q1 2021

Operational performance

• Total energy production increased by 25.3% to 12,876,247 kWh for the quarter ending March 31, 2022 as compared 10,277,608 kWh for the same period in 2021. This was directly attributable to COVID restrictions affecting operations in 2021
• Operational fleet capacity at March 31, 2022 was 46 systems at 43 sites totalling 5,810kWe compared to 48 systems at 45 sites totalling 6,012kWe at the end of March 2021.
• The Company promoted a long serving service technician to the role of Service Manager in January 2022 and hired a new senior service technician as his replacement towards the end of the quarter. Recruitment of a fourth service technician was also started during the quarter
• A new remote fleet monitoring system was implemented early in the quarter. This was developed in-house and is aimed at boosting operational performance of the fleet
• Various service technicians attended manufacturer training and gas safety permit courses during the quarter. These courses were long delayed due to COVID and while they resulted in some short-term operational challenges there are undoubted long-term benefits to such training    

Business and strategic development

• The Company signed a term sheet with Edwardian Hotels Group for a 355kW CHP solution at the Radisson Edwardian Blu Hotel Heathrow Airport in March 2022. The term sheet allows preliminary design works and application for various consents to be completed while commercial negotiations are concluded. The project will either proceed as a turnkey solution or fully funded, 15-year shared-risk On Site Utility Solution 
• The Company also continues to negotiate terms with Roko Health Clubs and Portsmouth Community Football Club for the replacement of their existing CHP solutions at a total of five sites. These new solutions will replace existing systems already under contract but extend these contracts to a full 15-years in each case. Negotiations are also underway with other existing customers to extend existing contracts
• As reported previously the Company wishes to remind investors that 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 supply of some spares for its fleet of CHP units are currently subject to extended lead times and delays. This is particularly the case for parts sourced forom the USA and for any control equipment and sensors fitted with microprocessors.  This could result in extended downtime if a unit breaks down or when routine services are due. Management have responded by increasing the stock levels of equipment held locally and by continuing to work with suppliers to minimise the impact of these shortages
• Staff turnover and labour shortages, particularly amongst third party contractors also have the potential to impact fleet performance. Management have responded by recruiting additional in-house service staff such that a team of four plus a Service Manager will be in place by the end of May
• Overall the Company continues to report that the outlook for 2022 appears good with increased revenue and gross profits expected as underlying energy prices rises start to impact results
• The Company continues to find that new business development is being affected by the accelerating need to reduce reliance on imported fossil fuels while also delivering on net zero targets. Natural gas-fuelled CHP remains disadvantaged compared to the electrification of heat using heat pumps, but the Company’s Green CHP offer is now gain traction having been shortlisted for several Net Zero awards. In turn the Company reports that this is leading to an increased sales pipeline although no orders have yet been placed for this solution
• 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

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

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.

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, 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.