DERBY, UK, May 14, 2024 -- 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 $181,307 for the first quarter of 2024, representing a  101.2% improvement on the net profit of $90,091 reported for the first quarter of 2023 and resulted from an increasing gross margin on revenues that were broadly similar to the same quarter last year. Gross margin for the first quarter increased from 28% to 33% while revenues grew from $1,997,737 in 2023 to $2,058,843 this year, a rise of 3.1%. Non-GAAP EBITDA for the quarter also remained strong at $371,231, up 31% on the $282,571 delivered in the same period last year.

Commenting on the Company’s results Dr Elias Samaras, Chief Executive Officer said, “After successfully delivering a profit in 2023 I am pleased to see the Company maintain profitability as we move forward on our plans to consolidate our position and grow our new renewables business”.

“The fleet produced more energy in the first quarter this year than it did last year yet energy prices have softened somewhat compared to the highs seen early last year. This resulted in a slower growth in our revenue, but a widening spark spread helped by maintenance efficiencies resulted in an increased margin that boosted our profitability” said Paul Hamblyn, Chief Operating Officer and Managing Director of the UK operating company. He added, “Q1 also saw increased business development activity and a growing sales pipeline, particularly for our new solar OSU offer and we look forward to reporting contract wins as the year progresses”.   

HEADLINES
Increased net profit, growing margin and continued positive EBITDA

• First quarter Net Profit of $181,307 in 2024 as compared to a Net Profit of $90,091 in quarter one of 2023, an improvement of 101.2%.
• EBIT or the gain from operations for the first quarter 2024 increased 59% to $173,056 from a gain of $108,944 in Q1 of 2023.
• First quarter non-GAAP EBITDA increased to $371,321, compared to $282,571 in the first quarter of 2023, an increase of 31%.
• Q1 2024 net profits for the UK operating company were £236,496 ($298,600), up 50% from the net profit of £157,220 ($190,984) reported in Q1 2023.
• Total revenue increased 3.1% to $2,058,843 for the first quarter of 2024 compared to $1,997,737 for the same period in 2023.
• Overall gross profit including depreciation for Q1 2024 increased to $680,007 compared to $564,885 for Q1 2023, a rise of 20%.
• Overall gross margin including depreciation increased to 33% from 28% while gross margin excluding depreciation and impairment increased to 43% for Q1 2024 compared to 37% for Q1 2023.
• Liquidity and cash position at March 31, 2024 improved to $3,264,082, up 39% on the cash held at March 31, 2023.
• Q1 2024 GAAP diluted net gain per share (EPS) was $0.0022, double the $0.0011 gain per share reported in Q1 2023.

Operational performance

• Total energy production increased by 3.6% to 13,611,013 kWh for the quarter ending March 31, 2024 as compared 13,137,063 kWh for the same period in 2023.
• Operational fleet capacity at March 31, 2024 was 48 systems at 46 sites totalling 5,932kWe, as compared to 46 systems at 43 sites totalling 5,810kWe at March 31, 2023.
• The Operations Team successfully completed its first general overhaul of a Tedom Cento unit. This represents an important milestone for the Company as the total run hours of some Tedom equipped sites will exceed the service interval for such work throughout 2024.
• The maintenance agreement for the 200kWe CHP unit installed at the Centre for Environment, Fisheries and Aquaculture Science Weymouth was renewed for a further year.
• The maintenance agreement for the 410kWe CHP unit installed at the Guildford Spectrum expired early in the quarter and moved to an ad-hoc arrangement while the customer considered options for a new long-term agreement to start after their financial year ends.
• The Company reached agreement with FJB Hotels to amend its existing OSU agreements for the Haven Hotel and Sandbank Hotel to operate 6-month a year. While this will result in lower annual energy production from each site, the energy cost discounts enjoyed by the customer are to be reduced until the contract expires.
• The OSU agreement for the Aberdeen Airport Dyce Hotel was terminated by the customer towards the end of the quarter and the contract was terminated on April 19, 2024. This followed the customer’s decision to permanently close the hotel ahead of redeveloping the site. A termination payment was received by the Company and the 80kWe CHP unit installed at the site has been recovered with the intention of redeploying it in the coming months.

Business and strategic development

• The Company signed a term sheet to supply a new 200kW CHP unit to an industrial facility during the quarter. The customer, Northpoint Limited provides powder coating solutions for both decorative and functional purposes and the proposed CHP will be used to heat the chemical solutions that pre-treat the material being coated ahead of applying the powder coating and curing. Once secured, this contract would be the Company’s first CHP application in the industrial sector.
• Reaction to the Company’s new solar OSU offer has been very positive and the active pipeline has grown to over 27 projects totalling more than 8,700kWe of installed capacity. Term sheets for two of these projects, totalling 1,700kWe are at an advanced stage of negotiation and term sheets were recently issued for client signature.
• The plan to replace the existing CHP solutions at the three remaining Roko Health Club sites has been put on hold after third-party funding could not be secured by the Company. This was solely due to the strength of the customers balance sheet and Management intend revisiting this once the customer’s year-end has passed and certain objectives have been met. Both the existing contracts and CHP assets continue to operate and are not affected by this decision.
• Following withdrawal of the funding agreement provided by Attika Holdings Limited, the board of directors of the UK operating company have decided to repay the outstanding loan due on the ICCW project and close the Special Purpose Vehicle (SPV) subsidiary, EuroSite Power Projects Limited using a solvent Members Voluntary Liqudiation process. This process has started but will take some months to complete. Once done it will ease the administrative burden imposed by the SPV and lower overall operating expenses.
• In addition, following the decision announced earlier last year to dissolve its Cypriot subsidiary, EuroSite Power Holdings Limited the Company has formally begun the ‘strike-off’ process required under Cypriot Law. This process is also expected to take some months to complete.

Outlook and risks

• Management reports that the outlook for its financial performance in 2024 remains positive with increased revenue and gross profits expected to continue off the back of sustained high energy prices and targeted additional energy production. While gross margin has increased this quarter it is however, expected to come under pressure from a narrowing spark spread as the year progresses although management expect this to be somewhat offset by higher margin solar PV projects starting to come online later in the year.  Management expects profitability to continue, particularly at the UK level but investment in renewables, including hiring new staff to better exploit these opportunities could result in higher overheads and pressure on profitability.
• Risk remains in the volatility of wholesale energy markets and, in particular the ongoing ability for conflict in both Ukraine and the Middle East to increase gas and electricity prices. As the Company’s revenue and gross margin is linked to underlying energy prices Management will continue to monitor these markets closely. 
• Some operational challenges remain, particularly in the form of supply chain problems and availability of staff when recruiting for new roles. Both could cause extended downtime of units that develop a fault and require repair and expansion of our sales effort may also be restricted. Management will continue to do its best to counteract these problems.
• New business development activity, particularly for cogeneration systems remains difficult in the UK as natural gas-fuelled CHP remains disadvantaged compared to the electrification of heat using heat pumps or heightened demand for solar and other renewable solutions.
• Management continues to keep a close eye on customer business performance and have identified a risk to some customers or specific sites, principally due to long-term debt needing to be restructured. This increases the risk of business failure in some customers or individual site closures that could in turn result in either novation or the termination of some existing contracts. 
• With both UK and US elections within the next 12-months the risk of government policy change is higher than normal.
• Other risks remain in the form of the availability of project credit and other impacts from the Ukrainian or Middle Eastern crisis and/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, 2023. 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.

Investor Contact:
Dr. Elias Samaras                                                                                          
EuroSite Power Inc.                                                                                   
+44 800 028 8001                                                                                   
elias.samaras@eurositepower.co.uk