23.06.03

23.6.2003: Meldung: Solar Energy Systems Ltd.: Quartalszahlen (engl.)

• Sales for the March Quarter of $751,000
• SES Forecast to be Profitable for 2003/04 Financial Year
• Water Services Business Development Commences with Feasibility Funding and Joint
Venture in the Maldives
• Renewed Federal Subsidies for the Grid Feed market
• SES Named in Deloitte Fast 50

THIRD QUARTER REVIEW
Sales Remain Strong Sales for the March quarter remained strong at $751,000, slightly ahead of budget for the period and close to record sales of $758,000 achieved in the December quarter. As expected, the significant inventory purchases necessary to meet the demand for systems resulted in higher cash burn for the quarter of $392,000. However, this figure remained within budget, and was partially affected by a large number of shipments in March, for which payment was received in April. For the ten months of the year to date, cash burn has averaged $64,000 per month, a significant improvement on last years figure of $142,000.
Grid Feed Solar
Power System

STRATEGIC PLAN UPDATE
Maiden Profit Expected
The directors of SES are pleased to announce that following the bi-annual strategic review; the SES Board expects that the company will be in a position to return a maiden EBITDA profit (Earnings Before Interest, Tax, Depreciation & Amortisation) in fiscal year 2004.

The reasons for this are largely related to forecast improvements in margins, following the identification by management of savings to be achieved in cost of goods sold. These improvements involve relatively low risk "structural" changes to the business, meaning there is a high probability of success.

A further increase in sales is also anticipated, with a conservative forecast growth rate below that of previous years being all that is required for profitability. This growth is projected to come from increased sales in the existing Sun Mill and submersible pump ranges, as well as modest initial sales from international markets and an increase in sales from the recently established Projects Business area. Adding weight to SES" sales projections is the news that the Australian Bureau of Agricultural & Resource Economics (ABARE) has forecast a "better year ahead for farmers", with ABARE"s Chief Commodity Analyst, Dr Terry Sheales, predicting "substantially higher farm incomes in the next financial year, after drought cut the net value of farm production by 80% in 2002/03". SES Managing Director Anthony Maslin said: "There are a number of factors that may impact on this financial model forecast, however given the growth experienced by the company over the past fiscal years, the Board is confident this forecast profit will be achieved."

NEW DEVELOPMENTS
Feasibility Funding & Joint Venture Signed for Maldives Water Service Business
The first steps in the development of a decentralised bottled water service business in the Maldives have been successfully completed. An initial visit to the Maldives has confirmed market potential for the business, with the Maldives consisting of 198 community islands, 87 resort islands and some 1,190 islands in total. The first pilot project systems are expected to be installed following government approvals expected in the coming months. A successful outcome to this pilot project has the potential for far reaching effects in the long term, as it will represent a business model which removes the largest hurdle to renewable water and power solutions in the developing world - the high upfront capital cost. In addition, it may also represent a sustainable solution for Government and multilateral agencies such as the United Nations and World Bank, donor groups and private entities to take water and power to those that need it most - people in off-grid locations of developing countries.

MoU signed with IT Environmental
SES has signed a Memorandum of Understanding (MoU) with IT Environmental, a leading contractor to the Department of Defence. The purpose of the agreement is to work together on proposals for renewable energy solutions for the Department of Defence, one of the largest landholders in remote areas of Australia.

Renewed Federal Subsidies for the Grid Feed Market
SES received a boost to its growing Grid Feed home solar power business during the quarter following a two-year extension of the Photovoltaic Rebate Program (PVRP) announced in the 2003 Federal Budget. The latest Budget has allocated an additional $11.5 million over two years to the PVRP, which provides a rebate of $4 per watt, to a maximum of $4,000 per household for residents who install an SES Grid Feed solar power system to their home.

SES Named in Deloitte Fast 50
The last quarter saw SES named as one of Australia"s fastest growing technology companies in the 2003 Deloitte Technology Fast 50, achieving three-year revenue growth of 854%. The SES Board credited the outstanding efforts of all SES staff; along with strong sales of the Sun Mill solar pump - the most sustainable water pumping solution for pumping water in remote areas - as the major foundation for such exceptional growth and an excellent outcome for the company.

OUTLOOK
Widespread rains across rural Australia have seen sales of Sun Mill for the months of April and May slow significantly, as farmers concentrate on other activities such as crop seeding. While this is likely to cause a weak final quarter result, it also improves the market outlook for the coming financial year, as good rains are an important determining factor in farm income, one of the key drivers for Sun Mill sales. Changes to cost of goods sold should see significant improvements in the next six months to margins. SES Managing Director Anthony Maslin said: "The last quarter has seen SES achieve some major breakthroughs, both in terms of new developments and a projected maiden profit. "With on-going development of a bottled water service business in the Maldives, an exciting MoU signed with IT Environmental, renewed Federal subsidies for the Grid Feed market and strong product sales expected on the back of substantially higher farm incomes, SES looks set to make great inroads in 2003/04."
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