ELECTRO POWER SYSTEMS ACCELERATES DEVELOPMENT AND STRENGTHENS ITS MANAGEMENT TEAM TO SUPPORT GROWTH

ELECTRO POWER SYSTEMS ACCELERATES DEVELOPMENT

AND STRENGTHENS ITS MANAGEMENT TEAM TO SUPPORT GROWTH

• The Group's first half 2016 consolidated revenue was € 2.6 million and its backlog[1] of orders was € 6.0 million


• Gross margin was € 1.1 million, equal to 42% of consolidated revenue in the first half of 2016


• The Group's net financial position was € 2.8 million at the end of June 2016[2] and, as of September 2016, it received a new credit line of € 2.5 million from Unicredit to support growth


• Projects pipeline conversion rate[3] increasing to 10%


• Solid project pipeline in Africa and Asia, thanks to technological partnerships and credentials with Enel, Toshiba, Terna, Necsom and General Electric


• Planned in Chile the commissioning of the first hybrid power plant with HyESS integrated with the hydrogen-storage module


• Reorganisation of its management team and Group governance: Paolo Morandi appointed Chief Operating Officer along with three new highly experienced executives, including Paolo Bonetti as Chief Financial Officer, Michela Costa as Executive Vice President of Operations and Andrea Rossi as Chief Business Officer

Paris/Milan, 20 September 2016 – The Board of Directors of Electro Power Systems S.A. ("EPS", or the "Group"), a pioneer in technology for clean-energy storage solutions, chaired by Massimo Prelz Oltramonti, has examined and approved its Half-Year 2016 Financial Report.

FINANCIAL OPERATIONAL HIGHLIGHTS

In the first half of 2016, the Group's consolidated revenue was € 2.615.517, compared to € 198.429 in the first half of 2015. The Group's backlog of orders is equal to € 6.0 million, and its project pipeline conversion rate increased to 10%.

Growth in sales, orders backlog and project pipeline are mainly due to the Group's development strategy focus, since 2015 second half, in:

1. emerging countries through hybrid systems (Hybrid Energy Storage System - HyESS) that use only renewable sources and storage technologies to generate energy at low cost; and 


2. developed markets, through strong technological partnerships and credentials with Enel, Toshiba, Terna and General Electric.

The Group's development strategy places 80% of the project pipeline in Africa and Asia, where, even before the planned commercial and service network on the territory is built, the low-cost hybrid energy solutions proposed by the Group have sparked strong interest.

Thus, EPS entered an agreement with Necsom in Eastern Africa to begin the second phase of an innovative power plant in the Horn of Africa. This hybrid power plant, located in Garowe, in Somalia's Puntland state, powered by solar and wind turbines in addition to traditional generators, by storing energy, will be able to transform intermittent renewable sources installed by the Group into a stable power source, saving more than 1 million litres of diesel yearly and cutting electricity bills by 17%.

The first half of 2016 financial results show a gross margin of € 1.092.368, representing 42% of the Group's consolidated revenue, confirming the Group's business and technology profitability.

In alignment with its recent emphasis on development strategy and growth, the Group's staff and operating costs have increased to € 1.830.867 and € 1.279.589, respectively, mainly as a consequence of the 2016 first half acquisition of Elvi Energy, which has played a pivotal role in executing the Group's new strategy.

At the end of the first half of 2016, the Group's net financial position was € 2.807.968, compared to € 8.285.208 as of 31 December 2015, mainly due to increases in working capital caused by a jump in orders backlog and to investments in research and development aimed to implementing both the HyESS and the hydrogen module.

Certification testing of the hydrogen module integrated with HyESS was successfully completed in July, after tests conducted by leading international laboratories. First commissioning of the system has been planned in Chile with a global utility.

To further support its growth, in July 2016, the Group received a short-term credit line of € 0.5 million from Unicredit, to provide additional working capital and a medium-long term credit line of € 2 million mainly dedicated to EPS's development plan. The relevant facility agreements were entered on 19 September 2016 and the medium-long term credit line has been drawn down on the same date.

As of 30 June 2016, little more than a year after its IPO on the regulated market, the Group had installed 46.3 MWh of energy-storage systems and 8.6 MW of hybrid power plants in 21 countries, in projects involving high profile clients and strategic partners including Terna, Enel, Necsom, Toshiba and General Electric.

NEW ORGANIZATIONAL STRUCTURE

As a result of the acquisitions finalised in the first half of 2016 and of the Group's recent growth, EPS has reorganised its management team and Group governance.

Paolo Morandi, who has more than 15 years of experience in ABB and AEG, then General Manager of Elvi Elettrotecnica Vitali S.p.A, has been appointed as Group's Chief Operating Officer.

In addition, the Group's executive team and corporate governance has been strengthened with the addition of the following three highly experienced professionals:

• Paolo Bonetti after key roles in Rabobank, Fiat Group and Banca IMI and more than 10 years of experience as Chief Financial Officer at The Royal Bank of Scotland, CDB Webtech and M&C, has been appointed Chief Financial Officer.


• Michela Costa, PhD and qualified lawyer, was a senior associate at Clifford Chance and then General Counsel at British Petroleum and Sorgenia for 10 years. She has been appointed Executive Vice President of Operations and will coordinate the Group's HR, Legal and Corporate Affairs, Safety and Communications departments.


• Andrea Rossi, MBA, was an investment banker at Merrill Lynch and Thomson Reuters, an entrepreneur in Restopolis (which today is TheFork.it, of the Tripadvisor Group) and Chief Financial Officer at Vailog. Andrea has been appointed Chief Business Officer and is responsible for internal control and related operations and for Group's information system.

Finally, in the context of the technology valorisation of the Group:

• Daniele Rosati, PhD in electrical engineering, visiting professor at Politecnico of Milan and responsible for developing and commissioning the most complex projects in the energy-storage field, including the Terna Power Intensive Project approved by the Italian Ministry of Economic Development (MiSE) within the 2012 Defense Plan to increase the security of the Italian electricity system, has been appointed the Group's Executive Vice President responsible for engineering.


• Nicola Vaninetti, who has more than 15 years of experience in power electronics for renewable energy systems and storage of the most complex hybrid power plants, has been appointed Executive Vice President responsible for products and hybrid solutions.

EPS announces that Fabio Magnani, Chief Operating Officer, left the Group on 31 August 2016. The Group thanks him for his work.

About Electro Power Systems

Electro Power Systems (EPS) operates in the sustainable-energy sector, specializing in hybrid-storage solutions that enable intermittent renewable sources to be transformed into a stable power source.

Thanks to a technology covered by 125 patents and applications more than 10 years of R&D, the Group has developed integrated hybrid energy storage solutions to stabilize electrical grids heavily penetrated by renewable sources and to power off-grid areas in emerging economies at a lower cost. EPS provides clean-energy solutions that reduce electricity bills without the need for any subsidy or incentive scheme.

The Group's mission is to unlock the energy transition by mastering the intermittency of renewable energy sources. By providing cutting-edge systems to control the intermittency of renewables—enhanced by storage technologies—and its unique hydrogen and oxygen storage platform, which enables longer autonomy without resorting to diesel- or gas-fuelled generators, the Group enables communities to be powered by renewable energies 24/7 more cleanly and less expensively. EPS is listed on the French regulated market, Euronext, is part of the CAC® Mid & Small and the CAC® All-Tradable indices and has registered offices in Paris and research, development and manufacturing in Italy. The Group has installed or under commission more than 10.5 MW of energy storage systems grid,
8.6 MW of hybrid power plants powered by renewables and energy storage and 3 MW of hybrid systems with hydrogen, for an aggregate output of 46.3 MWh and 22.1 MW in 21 countries worldwide, including the United States and countries in Europe, Latin America, Asia, and Africa.

For more information: www.electropowersystems.com.

ATTACHMENTS

1. Condensed consolidated financial statements
   
   
   
   1. Consolidated Income Statement
   
   

CONSOLIDATED INCOME STATEMENT

(amounts in Euro)
 
30/06/2016
31/12/2015
30/06/2015


 
 
 
 
 


Revenues
 
2.615.517
381.521
198.429


Other income
 
8.683
266.495
266.021


Cost of goods sold
 
(1.531.832)
(135.357)
(389.405)


GROSS MARGIN FROM SALES
 
1.092.368
512.659
75.045


Other costs for product development
 
(20.997)
(595.890)
0 


Personnel costs
 
(1.830.867)
(1.720.150)
(702.474)


Other operating expenses
 
(1.279.589)
(1.348.270)
(1.133.063)


EBITDA (1)
 
(2.039.085)
(3.151.651)
(1.760.492)


Stock options and warrant plans
 
(1.332.794)
(4.646.452)
(1.729.764)


Amortization and depreciation
 
(486.866)
(86.259)
(26.095)


Impairment and write down
 
65.071
80.369
52.129


Non-recurring income and expenses
 
(738.737)
(2.850.353)
(1.548.885)


EBIT (1)
 
(4.532.411)
(10.654.346)
(5.013.107)


Net financial income and expenses
 
(8.559)
(7.984)
(5.313)


Income taxes
 
(116.018)
64.806
64.806


NET INCOME (LOSS)
 
(4.656.988)
(10.597.524)
(4.953.614)


Attributable to:
 
 
 
 


Weighted average number of ordinary shares
 
7.881.807
5.487.201
3.677.178


BASIC EARNINGS PER SHARE
 
(0,59)
(1,93)
(1,35)

1. EBITDA and EBIT are not defined by IFRS. They are defined in notes 3.6 and 3.10 of the Half Year Financial Report 2016 of the Group.

1. Consolidated Statement of Other Comprehensive Income

OTHER COMPREHENSIVE INCOME

(amounts in Euro)
30/06/2016
31/12/2015
30/06/2015


 
 
 
 


NET INCOME (LOSS)
(4.656.988)
(10.597.524)
(4.953.614)


 
 
 
 


Other comprehensive income to be reclassified to profit or loss in subsequent periods

(net of tax)
 
 


Exchange differences on translation of foreign operations
(418)
(5.448)
45


Other comprehensive income not to be reclassified to profit or loss in subsequent periods (net of tax)
 
 


Actuarial gain and (losses) on employee benefits
(38.933)
(2.973)
0


 
 
 
 


OTHER COMPREHENSIVE INCOME (LOSS) FOR THE YEAR, NET OF TAX
(39.351)
(8.421)
45


 
 
 
 


TOTAL COMPREHENSIVE INCOME FOR THE YEAR, NET OF TAX
(4.696.339)
(10.605.945)
(4.953.569)


 
 
 
 


ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
(4.696.339)
(10.605.945)
(4.953.569)

1. Consolidated Balance Sheet

ASSETS

(amounts in Euro)
 
30/06/2016
31/12/2015
30/06/2015


Property, plant and equipment
 
912.097
748.115
68.133


Intangible assets
 
4.456.981
820.243
135.251


Other non-current financial assets
 
90.364
65.582
788


TOTAL NON-CURRENT ASSETS
 
5.459.442
1.633.940
204.172


 
 
 
 
 


Trade receivables
 
2.510.849
1.152.197
646.528


Inventories
 
1.610.934
938.933
786.183


Other current assets
 
1.541.521
3.602.430
1.056.456


Cash and cash equivalent
 
2.808.017
8.573.811
10.813.712


TOTAL CURRENT ASSETS
 
8.471.321
14.267.371
13.302.879


 
 
 
 
 


TOTAL ASSETS
 
13.930.763
15.901.311
13.507.051


 
 
 
 
 


EQUITY AND LIABILITIES

(amounts in Euro)
 
30/06/2016
31/12/2015
30/06/2015


Issued capital
 
1.576.361
1.576.361
1.436.061


Share premium
 
18.082.718
18.082.718
13.581.573


Other reserves
 
5.643.809
4.394.930
1.550.481


Retained earnings
 
(11.626.584)
(1.029.060)
(1.029.060)


Profit (loss) for the period/year
 
(4.656.988)
(10.597.524)
(4.953.614)


TOTAL EQUITY
 
9.019.316
12.427.425
10.585.441


Severance indemnity reserve
 
598.411
336.403
315.585


Non-current deferred tax liabilities
 
249.166
0
0


TOTAL NON-CURRENT LIABILITIES
 
847.577
336.403
315.585


Trade payables
 
2.934.114
2.111.877
1.525.977


Other current liabilities
 
1.037.531
999.862
1.080.048


Current financial liabilities
 
63.192
25.744
0


Income tax payable
 
29.033
0
0


TOTAL CURRENT LIABILITIES
 
4.063.870
3.137.483
2.606.025


 
 
 
 
 


TOTAL EQUITY AND LIABILITIES
 
13.930.763
15.901.311
13.507.051

1. Consolidated Statement of Changes in Equity

CONSOLIDATED STATEMENT OF

CHANGES IN EQUITY

(amounts in Euro)
 
Share Capital
Premium Reserve
Other Reserves
Retained Earnings (Losses)
Profit (Loss) for the period
TOTAL NET EQUITY


Net Equity as at June 30, 2015
 
1.436.061
13.581.573
1.550.481
(1.029.060)
(4.953.614)
10.585.441


EPS Group Reorganization
 
0
0
0
293.989
(293.989)
0


Previous year result allocation
 
0
0
0
(293.989)
293.989
0


Treasury shares
 
0
0
(63.772)
0
0
(63.772)


Stock option and warrants
 
0
0
2.916.580
0
0
2.916.580


Shareholder's capital contribution (IPO)
 
0
71.754
0
0
0
71.754


Shareholder's capital increase
 
140.300
4.429.391
0
0
0
4.569.691


Loss for the period
 
0
0
0
0
(5.643.910)
(5.643.910)


Other Comprehensive Income
 
0
0
(8.359)
0
0
(8.359)


Actuarial gains and losses on defined benefit plans
 
0
0
(2.973)
0
0
(2.973)


Currency translation differences
 
0
0
(5.386)
0
0
(5.386)


Total comprehensive income
 
0
0
(8.359)
0
(5.643.910)
(5.652.269)


Net Equity as at December 31, 2015
 
1.576.361
18.082.718
4.394.930
(1.029.060)
(10.597.524)
12.427.425


EPS Group Reorganization
 
0
0
0
0
0
0


Previous year result allocation
 
0
0
0
(10.597.524)
10.597.524
0


Treasury shares
 
0
0
(44.564)
0
0
(44.564)


Stock option and warrants
 
0
0
1.332.794
0
0
1.332.794


Shareholder's capital contribution (IPO)
 
0
0
0
0
0
0


Shareholder's capital increase
 
0
0
0
0
0
0


Loss for the period
 
0
0
0
0
(4.656.988)
(4.656.988)


Other Comprehensive Income
 
0
0
(39.351)
0
0
(39.351)


Actuarial gains and losses on defined benefit plans
 
0
0
(38.933)
0
0
(38.933)


Currency translation differences
 
0
0
(418)
0
0
(418)


Total comprehensive income
 
0
0
(39.351)
0
(4.656.988)
(4.696.339)


Net Equity as at June 30, 2016
 
1.576.361
18.082.718
5.643.809
(11.626.584)
(4.656.988)
9.019.316

1. Consolidated Statement of Cash Flows

CASH FLOW STATEMENT

(amounts in Euro)
 
1st Half 2016
Full Year 2015
1st Half 2015


Operating activities
 
 
 
 


Net Profit (Loss)
 
(4.656.988)
(10.597.524)
(4.953.614)


Non-cash adjustment to reconcile profit before tax to net cash flows
 
 
 
 


Amortization and depreciation
 
486.866
86.259
26.095


Impairment and write down
 
(65.071)
(80.369)
(52.129)


Stock option and warrant plan accrual
 
1.332.794
4.646.452
1.729.764


Defined Benefit Plan
 
0
31.956
31.956


Income related to composition with creditors
 
0
(235.933)
(235.933)


Working capital adjustments
 
0 
 0
0


Decrease (increase) in trade and other recev and prepayments
 
677.475
(3.790.569)
(350.240)


Decrease (increase) in inventories
 
(606.930)
(158.903)
(34.393)


Increase (decrease) in trade and other payables
 
1.137.687
745.226
222.233


Increase (decrease) in non-current liabilities
 
223.075
11.764
(9.054)


Net cash flows from operating activities
 
(1.471.092)
(9.341.641)
(3.625.315)


Investments
 
 
 
 


Net Decrease (Increase) in intangible assets
 
(1.332.422)
(706.846)
0


Net Cash flow deriving from business combination
 
(2.740.902)
0
0


Net Decrease (Increase) in tangible assets
 
(214.262)
(726.261)
(7.970)


Net cash flows from investments activities
 
(4.287.586)
(1.433.107)
(7.970)


Financing
 
 
 
 


Reimbursement of Financial Loans
 
0
0
0


Increase (decrease) in bank debts
 
37.448
0
0


Shareholders cash injection
 
0
0
0


Purchase of treasury shares
 
(44.564)
(63.772)
0


Warrants
 
0
4.397
4.397


Net Proceeds from increses of Capital
 
0
17.921.769
13.280.326


Receipt of government grants
 
0
781.253
457.361


Net cash flows from financing activities
 
(7.116)
18.643.647
13.742.084


EPS SA Statutory net cash and cash eq. at Period Beginning
 
0
37.000
37.000


Net cash and cash equivalent at Period Beginning
 
8.573.811
667.913
667.913


Net cash flow
 
(5.765.794)
7.868.899
10.108.799


Net Cash and cash equivalent at Period End
 
2.808.017
8.573.811
10.813.712

1. Net Financial Position

NET FINANCIAL POSITION

(amounts in Euro)
1st Half 2016
Full Year 2015
1st Half 2015


 
 
 
 


Cash and cash equivalent
2.808.017
8.573.811
10.813.712


Cash at banks and petty cash
2.807.968
8.285.208
10.438.292


Cash related to advances on grants
49
288.603
375.420


Current financial payables
(49)
(288.603)
(375.420)


Cash on grants
(49)
(288.603)
(375.420)


NET FINANCIAL POSITION
2.807.968
8.285.208
10.438.292

Source: Actusnews