Outlook
During the period since the successful AIM flotation on 12 May 2004 the Company has continued to push forward on a number of fronts. We have significantly progressed our installed user-base, and have continued to build-up the Company’s forward order book which now stands at $73 million. The order book continues to reflect a significant element of repeat business. The Company also has significant new prospects both in the US and Europe which it intends to close in the coming months.
SIT has a growing number of ‘blue-chip’ international clients and client prospects, both in the private and public sectors. We believe this to reflect the continued growing awareness and interest in the combined roofing/photovoltaic offering and marks the Company’s successful transition from start-up, to fully-operational business, a rare feat for a company formed as recently as the first quarter of 2003, let alone one in the renewable energy sector.
At the time of the IPO the Company was working with a view to establishing a platform for delivery of an innovative financing package for current and prospective multi-national customers. We are pleased to be able to report significant progress in this respect. The Company has signed an exclusive two year agreement with Capstar Partners, a BNP Paribas company, to facilitate $250 million of structured financing for the 2004 - 2005 period. The Company has engaged Orrick, Herrington & Sutcliffe LLP as legal counsel worldwide to structure the framework for successful securitization. The process is designed to effect the most comprehensive and profitable financing arrangement for the Company’s immediate and longer-term objectives. However, this review, and subsequent negotiations, has taken somewhat longer than management had anticipated.
As a result, whilst the Company’s contract order book has increased in this period and installation has remained ongoing, management believes that the delay in structuring this financing will impact the Company’s ability to complete certain contracts by the end of the current financial year and to recognize the revenue accordingly. Hence, the Company’s results for the full year to 31 December 2004 may fall short of market expectation, but on the positive side, the Company’s contracted customers requiring financing are unaffected by these temporary delays and remain committed to the SIT offering. Management is therefore confident that, subject to finalizing financing, any deferral of revenues previously expected during 2004, will be achieved during early 2005.
The Company has expanded its US market reach into the Northeast. It currently has underway its second project for this region in upstate New York. The Company has increased its overall outstanding prospects since the IPO. More importantly, the Company has commenced an aggressive push into the European marketplace by expanding its on the ground sales force in Germany and increased its outstanding prospects in Europe since the IPO. The Company is committed to move as rapidly as possible to establish a European identity by appointing a new European CEO based in London during Q4.
The company is proceeding to increase its production capacity to accommodate anticipated orders. It has also accelerated the wind down of its affiliate company SCR Group, Inc. During the IPO, it was envisaged that it would require 18 months time to effectively wind down SCR and transfer its technical know how over to SIT. Based on the pace of developments, the Company is highly confident that SCR will be materially wound down by the end of 2004 providing SIT with maximum capacity to leverage its rollout for 2005.
Developments have increased management confidence that SIT is poised for a year of significant top and bottom-line growth. The Company is in an exciting period in its development, with considerable progress on all fronts but in particular in its European strategy which is expected to impact in the near-term. With a strong capital base following the successful IPO, a robust and growing order book and the imminent completion of an innovative financing structure, we remain exceedingly positive about the future growth prospects of the Company.
Edward J. Stevenson
Chief Executive Officer
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