ENGIE EPS 2018 Results
Carlalberto Guglielminotti, Chief Executive Officer at ENGIE EPS (Paris:EPS), commented “In 2018 ENGIE EPS posted an impressive growth with revenues increased by 57%, and thanks to ENGIE’s support a more than doubled backlog with a pipeline of over €300 million, maintaining a 30% gross margin. These results witness the intensity and commitment of the extraordinary people we have at ENGIE EPS. There are now hundreds of megawatts of microgrids and solar-plus-storage tenders around the world and together with ENGIE Solar we are positioned as top-tier player with a unique vertically integrated and turn-key value proposition. We will now focus on continuous sustainable growth as well as on our path to profitability. These results were achieved during a year where ENGIE EPS experienced a transformational change in its ownership structure, including a capital raise subscribed by old and new investors”.
2018 KEY FIGURES1
Revenues amount to €15.5 million as of 31 December 2018, up 57% compared to the previous year. This growth is mainly due to positive developments in our core addressable markets: microgrids in islands and emerging countries, and grid support in developed economies – in both cases partnering with ENGIE. In particular, successful deployment of microgrids such as the Comoros, Somaliland, New Caledonia and Singapore. More importantly, growth is also due to grid-connected solutions in Europe with 24MW storage systems that went online in Spain, Italy and Belgium.
Pipeline as of the date of this Press Release increased by 101% compared to 28 March 2018, reaching €302 million. Order intake in 2018 has reached 41.3MW, representing approximately €10.9 million. This achievement confirms the effectiveness of ENGIE EPS’ business model in Southern Europe, Africa and Asia Pacific regions, which has enabled ENGIE EPS to accelerate its growth reaching a total of 46 customers in 23 countries across the globe.
Project Backlog as of the date of this Press Release corresponds to €52.4 million, an increase of 109% compared to 28 March 2018. ENGIE’s projects played a pivotal role, including a solar-plus-storage project awarded in partnership with ENGIE Solar representing 61% of the Project Backlog. This includes the total EPC value of such solar-plus-storage project whereas the related revenue recognition for the PV portion (approx. 55% of the Project Backlog) will depend on the final allocation of the EPC responsibilities between ENGIE EPS and ENGIE Solar.
In other terms, notwithstanding the retendering of the Armonia project in Palau announced on 15 February 20192, Project Backlog more than doubled compared to last year, and is currently comprised of €42.7 million projects on an EPC basis, and €9.7 million projects secured on a Power Purchase Agreement (PPA) basis, for which financing is currently under structuring.
1 The 2018 consolidated IFRS financial statements have been approved by the board of Directors on 14 March 2019, the audit procedures have been completed and the statutory auditors’ report is in the process of being issued.
2 The Armonia project represented a 100MW microgrid, which had been awarded to ENGIE EPS (see 12 October 2018 press release) and was included in the backlog after that date. Following the Palau government’s decision, for internal reason, to reopen the tender (see 15 February 2019 press release), it is no longer included in the backlog.
Gross margin stands above 30%, despite an increase in project size and complexity.
Personnel costs increased by 24% reaching €4.4 million compared to the €3.5 million of 2017. This is due to the continuous intensity in R&D and a major commitment in undertaking business execution.
R&D investments amounted to €3.2 million, including expenses and capitalized amounts. These investments represent 20% of consolidated revenues and 40% of all fixed costs, confirming once more the strong commitment of ENGIE EPS in R&D and innovation.
Other Operating Expenses decreased by 24% amounting to €1.6 million compared to €2.1 million in 2017. This is due to cost rationalization and a more efficient internal organizational structure.
EBITDA loss amounts to €4.6 million in 2018 compared to the €1.7 million loss of 2017. This is mainly the consequence of the negative impact of scaling EPC and outsourced construction activities in view of the utility-scale focus. However, in 2019, ENGIE’s support and the partnership with ENGIE Solar could dramatically change the current outlook, given their experience gained through the 1.2GW of new solar PV awards on a worldwide basis. Overall, this should contribute to a more structured and sophisticated approach to EPC activities, enabling a sustainable path to profitability.
Net Result as of 31 December 2018 improved by 3% compared to 2017, from € -9.0 million to € -8.7 million. Non-recurrent items accounting for €2.6 million, which significantly affected the operating result and are mainly represented by non-recurring legal and accounting expenses linked to extraordinary transactions, namely the corporate change of control, the Mandatory Tender Offer and the Rights Issue carried out in 2018.
Net Financial Position at the end of 2018 increased to €6.8 million from € -12.3 million on 31 December 2017, mainly due to the €30 million capital increase and the growth in revenues, despite working capital and continuous investments in R&D. In this respect, ENGIE EPS has constantly been supported by Intesa Sanpaolo, which in February 2019 approved, subject to customary condition precedents for ENGIE group companies, an additional €7.5 million facility.
ENGIE EPS’ integration process within the ENGIE Group started in 2018 and resulted in a positive outcome. ENGIE’s contribution to business development represents 67% from a Project Backlog perspective and 79% at the Pipeline level. More importantly, hundreds of megawatts of microgrids and specifically solar plus storage projects will be tendered in the coming months around the globe, and ENGIE EPS with the support of ENGIE Solar is well positioned with a unique vertically integrated turn-key proposition. Microgrids and utility scale storage have been prioritized for development by ENGIE and will play a significant role in ENGIE’s renewable strategy plan.
In addition, during ENGIE’s Capital Markets Day held on 28 February 2019 in London, further emphasis has been given to ENGIE EPS’s positioning as a microgrid world market leader as well as future opportunities for microgrids and energy storage.
In this context, ENGIE and ENGIE EPS management teams will continue to work together to maximize synergies and determine the appropriate level of integration between their respective businesses.
Once the effects of such integration can be better assessed, ENGIE EPS will provide an update of its strategic plan for the 2020 and beyond over the course of 2019.
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The investor conference call is scheduled on 15 March 2019 at 8:30am, dial-in and the presentation will be available in the new corporate website: engie-eps.com/financial-calendar
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About ENGIE EPS
ENGIE EPS is part of the ENGIE group and specializes in microgrids and storage solutions that enable intermittent renewable sources to be transformed into a stable power source. Listed on Euronext Paris (EPS:FP), ENGIE EPS is listed in the CAC Mid & Small and the CAC All-Tradable indices. Its registered office is in Paris and conducts its research, development and manufacturing in Italy. Thanks to technology covered by 130 patents and applications, ENGIE EPS develops utility scale energy storage systems to stabilize electrical grids that are heavily penetrated by renewable sources in developed countries, and microgrids in islands and emerging economies to power off-grid areas at a lower cost than fossil fuels. More information on www.engie-eps.com
We are a global energy and services group, focused on three core activities: low-carbon power generation, mainly based on natural gas and renewable energy, global networks and customer solutions. Driven by our ambition to contribute to a harmonious progress, we take up major global challenges such as the fight against global warming, access to energy to all, or mobility, and offer our residential customers, businesses and communities energy production solutions and services that reconcile individual and collective interests. Our integrated - low-carbon, high-performing and sustainable - offers are based on digital technologies. Beyond energy, they facilitate the development of new uses and promote new ways of living and working. Our ambition is conveyed by each of our 150,000 employees in 70 countries. Together with our customers and partners, they form a community of imaginative builders who invent and build today solutions for tomorrow.
2017 turnover: 65 billion Euros. Listed in Paris and Brussels (ENGI), the Group is represented in the main financial (CAC 40, BEL 20, Euro STOXX 50, STOXX Europe 600, MSCI Europe, Euronext 100, FTSE Eurotop 100, Euro STOXX Utilities, STOXX Europe 600 Utilities) and extra-financial indices (DJSI World, DJSI Europe and Euronext Vigeo Eiris - World 120, Eurozone 120, Europe 120, France 20, CAC 40 Governance). To learn more: www.engie.com.
Forward looking statement
This release may contain forward-looking statements. These statements are not undertakings as to the future performance of ENGIE EPS. Although ENGIE EPS considers that such statements are based on reasonable expectations and assumptions at the date of publication of this release, they are by their nature subject to risks and uncertainties which could cause actual performance to differ from those indicated or implied in such statements. These risks and uncertainties include without limitation those explained or identified in the public documents filed by ENGIE EPS with the French Financial Markets Authority (AMF), including those listed in the “Risk Factors” section of the ENGIE EPS (ex EPS) Registration Document filed with the AMF on 13 July 2018 (under number R.18-057). Investors and ENGIE EPS shareholders should note that if some or all of these risks are realized they may have a significant unfavorable impact on ENGIE EPS.
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