Sabien Tech. Regulatory News (SNT)

16 September 2016

Sabien Technology Group plc("Sabien" or the "Company")

£750,000 Placing to continue growth strategy and scaling of M2G pilots

Sabien (AIM: SNT), the manufacturer and supplier of M2G, an energy efficiency technology, is pleased to announce that it has conditionally placed with institutional and other investors (the "Placing") 18,750,000 new ordinary shares of 0.5 pence each (the "Placing Shares") at 4 pence per Placing Share raising £750,000 (before expenses) for the Company. Stockdale Securities Limited ("Stockdale") and Keith, Bayley, Rogers & Co. Limited have acted as brokers on the Placing.

Highlights

· Placing of 18,750,000 Placing Shares at 4 pence per share to raise £750,000 from institutional and other investors.

· Admission to trading on AIM expected on 21 September 2016.

· The funds raised from the Placing will provide Sabien with the capital necessary to continue with its growth strategy for up to 40 M2G pilot projects for the Company's target client base in FY2017 (vs 35 in FY2016).

· The funds received in the Placing will be used to finance pilots of M2G, our boiler load optimisation control and initial pilots of EndoTherm, an energy reduction commercial heating additive, whilst ensuring that a prudent net cash position is maintained.

Alan O'Brien, Chief Executive Officer of Sabien said: "I am very pleased to announce this successful placing. As well as thanking existing shareholders for their relentless support, we are also extremely pleased to welcome new institutional shareholders to the Company as part of this fund-raise. We successfully achieved our target of signing up to 35 M2G pilots in FY2016 and, in line with expectations we plan to run up to 40 M2G pilots in FY2017. These include some more in the USA where we supported our distributor in running a number of successful pilots last year. Additionally, we will be piloting the EndoTherm product for which we recently obtained an exclusive 10-year licence for distribution to the multi-site commercial heating market in the UK."

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Background to and reasons for the Placing

The Company announced on 2 June 2016 that it expected to report revenue of c.£0.9m, and a loss of up to £1.7m for the financial year to 30 June 2016. This was the result of the withdrawal of a number of large prospects from the opening pipeline at 1 July 2015 and a reduction in contract value of a number of sales. The Company however expected to receive orders for at least £500k in the course of June and July, which are the result of paid pilots carried out in the previous financial year to 30 June 2015. These orders are now expected to be received in the 2nd quarter of FY 16/17.

On 13 July, the Company announced that the number of UK pilots completed in the financial year to 30 June 2016 was 30 and there were a further five UK pilots still in the pilot process. The Company is working on the pilot programme for the current financial year and has identified and received expressions of interest from a number of organisations which meet the Company's criteria for inclusion in the programme which is scheduled to commence in the autumn.

The Company also announced that it had signed a 10-year agreement with Endo Enterprises (UK) Ltd to act as sole distributor for Endotherm in the UK to the multi-site commercial heating sector. EndoTherm is a liquid additive for commercial heating systems which has been proven to improve thermal efficiency and provide savings of up to 25%. M2G and Endotherm are complementary and natural partners to help improve the overall heating system efficiency.

On the same date, the Company reported that the sales pipeline was standing at £12.5m which compared with £11.4m at the time of the trading update on 2 June. Orders of £111k had been received since 1 July 2016 and will be recognised as sales revenue in the current financial year.

The company is targeting a return to profitability by the year to June 2018 and has set itself five year targets of a sales pipeline of £25 million, converting into annual turnover of £8 million with a 25% EBITDA margin.

Use of net proceeds

The net proceeds of the Placing will be applied (i) to the expansion of the pilot programme for both M2G and EndoTherm (up to 40 pilots in FY2017 for M2G); (ii) to continue the routine development of M2G; and (iii) for working capital purposes to ensure that the Company maintains a strong balance sheet whilst funding the increased number of pilots each year.

Admission

The Placing Shares have been conditionally placed with institutional and other investors by Stockdale Securities Ltd. The Placing Shares will, when issued, rank pari passu with the Company's existing issued ordinary shares. Application has been made for admission to trading on AIM ("Admission") of the Placing Shares and it is expected that Admission will occur on or around 21 September 2016.

Following Admission, the total enlarged issued share capital of the Company will be 62,754,867 ordinary shares of 0.5 pence each ("Ordinary Shares"). This figure may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the FCA's Disclosure and Transparency Rules.

HMRC has confirmed that: (i) the Placing Shares will be eligible shares for the purposes of section 285(3) of the Income Tax Act 2007 and the Placing Shares held by venture capital trusts will be "qualifying holdings" for the purposes of Chapter 4, Part 6 of the Income Tax Act 2007; and (ii) the Company will be a "qualifying company" and the Placing Shares will be eligible shares for the purposes of the Enterprise Investment Scheme.

Placing statistics

Conditionality

The Placing is conditional upon, inter alia, Admission becoming effective and the placing agreement between the Company and Stockdale Securities Ltd becoming unconditional and not being terminated in accordance with its terms.

Directors' dealing

Bruce Gordon, Chairman of the Company, and Karl Monaghan, a non-executive director of the Company, are participating to the Placing by subscribing to 3,695,000 and 125,000 Placing Shares respectively.

As a result of his participation in the Placing, following Admission, Bruce Gordon will hold 5,495,000 Ordinary Shares directly, which will represent 8.7% of the share capital as enlarged by the Placing (the "Enlarged Share Capital"). Bruce is also a director of Thames Valley Capital Limited, an advisor to TVI 2 Limited, which holds 4,108,356 Ordinary Shares, which will represent 6.5% of the Enlarged Share Capital. Bruce Gordon will therefore be interested, directly and indirectly, in 9,603,356 Ordinary Shares, representing 15.3% of the Enlarged Share Capital.

As a result of his participation in the Placing, following Admission, Karl Monaghan will hold 1,522,945 Ordinary Shares, representing 2.4% of the Enlarged Share Capital.

Related Party Transactions

The participation in the Placing by Bruce Gordon and Karl Monaghan in aggregate is deemed a related party transaction under the AIM Rules for Companies; the directors, with the exclusion of Bruce Gordon and Karl Monaghan, consider, having consulted with the Company's nominated adviser, Stockdale Securities Limited, that the terms of Bruce Gordon's and Karl Monaghan's participations in the Placing are fair and reasonable insofar as the Company's shareholders are concerned.