Last checked at 9 Feb 2016 07:00
9 February 2016
Sabien Technology Group Plc
("Sabien" or the "Group")
Unaudited Interim Results for the period to 31 December 2015
Sabien Technology Group plc (AIM: SNT), the manufacturer of the patented M2G energy saving devices, announces its unaudited interim results for the six month period ended 31 December 2015 (comparatives are shown for the same period in the previous year unless otherwise stated):
Highlights in the period
· Sales revenue £321k (2014/15 - £542k)
· Sales orders received £268k (2014/15: £610k)
· Loss before tax £984k (2014/15 - £521k loss)
· Net cash at the end of the period £868k (£1,171k at 30 June 2015)
· Sales pipeline of £6.4m
· 30 UK Pilots agreed with customers
· Sales from indirect partners 49% of total sales revenue (2014/15: 24%)
· Overseas sales £69k (2014/15: £121k)
· Order for £314k received in February 2016 giving total orders received since 1 January 2016 of £412k. Total orders received so far for delivery this financial year £680k (2014/15 - £2,000k)
Chairman and Chief Executive Officer's Report
Sales order update:
We are pleased to announce that the Group has received an order in February 2016 for £314k from a Council that had completed a pilot at 3 of its sites of the Group's M2G product in November 2014. The pilot results showed an average saving of 11% with a payback of under 3 years.
Strategy update:
In the last Annual Report, we stated that the Group had set a new 5 year growth strategy to remove uncertainty around sales order lumpiness and to help mitigate the delays in mobilising M2G pilots and public sector contract awards brought about by long tender processes. The key objective for management was to significantly scale up large multi-site M2G pilots in each year over the next 5 years both in the UK and overseas by running up to 35 pilots in the 2015-16 heating season, compared to 8 in 2014-15, and to improve on this level in the 5 years to 2020.
At the Annual General Meeting held on 18 November 2015, we reported that 21 clients had signed an agreement to proceed with a pilot and that 6 were live. We are pleased to report that as of today's date 30 clients have signed an agreement to proceed with a pilot. Of these, 12 are installed and are being monitored while the remaining 18 are currently awaiting survey. It is expected that these will be installed and the pilots completed before the end of the current heating season at the end of April.
Finance
The Group's turnover in the period was £321k (2014/5 - £542k) and there was a loss before tax of £984k compared to a loss of £521k in the same period last year. It is anticipated that sales revenue will be back-end loaded this year as was the case in the year ended 30 June 2015.
Gross margins in the period at 61% were lower than in previous periods due to an increase in costs relating to the pilot programme. The increase in operating loss is caused by a number of factors including an increase of 50% in headcount, with the recruitment of more technical and administrative personnel, and the routine development and upgrading of the Group's M2G product, both of which had been taken into account in the preparation of the Group's budget and forecasts for the year.
As at 31 December 2015, the Group's net cash reserves amounted to £868k compared to £1,171k at 30 June 2015 and £1,106k at 31 December 2014. The Group's target is to hold at least 3 months' worth of operating costs on current account and short term deposit.
During the period, the Group purchased and has capitalised the cost of data monitoring equipment costing £90k. This equipment is used in the monitoring and recording of data during pilots.
Current Trading
Since the period ended 31 December 2015, £412k of orders have been received giving total orders received for the year to date of £680k.
The sales pipeline currently stands at £6.4m. This pipeline includes both sales opportunities with an order date in the future and those where we have been asked to quote but where no order date has been indicated by the client. In our annual report published in October, we announced a sales pipeline number of £5.8m. The size of the sales pipeline is one of our key performance indicators as it gives us an indication of the level of business that could be generated over the following 24 months. Sabien's experience is that it can take between 6 to 24 months for a customer enquiry to convert to a sales order. Management of this pipeline and its conversion to sales orders is a key performance indicator for the Group.
Outlook
The Board anticipates that the trading performance will be in line with its expectations for 2016 dependent on the Group receiving a number of orders by 30 June 2016 for which customers have given an indication of the likely order date.
Bruce Gordon Alan O'Brien
Chairman Chief Executive Officer
For further information:
Sabien Technology Group plc
Alan O'Brien - Chief Executive Officer
Gus Orchard - Finance Director 020 7993 3700
Stockdale Securities Limited
Antonio Bossi
Rose Ramsden 020 7601 6100
Sabien Technology Group Plc
Unaudited Condensed Group Statement of Comprehensive Income for the period ended 31 December 2015
| Notes | 6 months to 31 December 2015 | 6 months to 31 December 2014 | Year to 30 June 2015 |
|
| Unaudited | Unaudited | Audited |
|
| £'000 | £'000 | £'000 |
|
|
|
|
|
Revenue |
| 321 | 542 | 1,744 |
Cost of Sales |
| (125) | (172) | (513) |
|
|
|
|
|
Gross Profit |
| 196 | 370 | 1,231 |
|
|
|
|
|
Administrative expenses |
| (1,180) | (896) | (1,812) |
|
|
|
|
|
Operating Loss |
| (984) | (526) | (581) |
|
|
|
|
|
Investment revenues |
| 1 | 6 | 13 |
|
|
|
|
|
Loss before tax |
| (983) | (520) | (568) |
|
|
|
|
|
Tax charge | 3 | - | - | (215) |
|
|
|
|
|
Loss for the period attributable to equity holders of the parent company |
| (983) | (520) | (783) |
Other comprehensive income for the period |
| - | - | - |
|
|
|
|
|
Total comprehensive income for the period |
| (983) | (520) | (783) |
|
|
|
|
|
Loss per share in pence - basic | 4 | (2.3)p | (1.6)p | (2.4)p |
Loss per share in pence - diluted | 4 | (2.3)p | (1.6)p | (2.4)p |
|
|
|
|
|
| ||||
Sabien Technology Group Plc
Unaudited Condensed Group Statement of Financial Position as at 31 December 2015
| Notes | 31 December 2015 | 31 December 2014 | 30 June 2015 |
|
| Unaudited | Unaudited | Audited |
|
| £'000 | £'000 | £'000 |
ASSETS |
|
|
|
|
Non-current assets |
|
|
|
|
Property, plant and equipment |
| 154 | 88 | 68 |
Other intangible assets |
| 485 | 532 | 508 |
Deferred tax | 3 | - | 215 | - |
Total non-current assets |
| 639 | 835 | 576 |
|
|
|
|
|
Current assets |
|
|
|
|
Inventories |
| 227 | 265 | 207 |
Trade and other receivables |
| 160 | 213 | 282 |
Cash and cash equivalents |
| 868 | 1,106 | 1,171 |
Total current assets |
| 1,255 | 1,584 | 1,660 |
|
|
|
|
|
TOTAL ASSETS |
| 1,894 | 2,419 | 2,236 |
|
|
|
|
|
EQUITY AND LIABILITIES |
|
|
|
|
Current liabilities |
|
|
|
|
Trade and other payables |
| 227 | 202 | 281 |
Total current liabilities |
| 227 | 202 | 281 |
|
|
|
|
|
EQUITY |
|
|
|
|
Equity attributable to equity holders of the parent |
|
|
|
|
|
|
|
|
|
Share capital | 5 | 2,200 | 1,650 | 1,650 |
Other reserves |
| 332 | 186 | 187 |
Retained earnings |
| (865) | 381 | 118 |
Total equity |
| 1,667 | 2,217 | 1,955 |
TOTAL EQUITY AND LIABILITIES |
| 1,894 | 2,419 | 2,236 |
Sabien Technology Group Plc
Unaudited Condensed Group Cash Flow Statement for the period ended 31 December 2015
|
|
|
|
| |
|
| 6 months to 31 December 2015 | 6 months to 31 December 2014 | Year to 30 June 2015 | |
|
| Unaudited | Unaudited | Audited | |
|
| £'000 | £'000 | £'000 | |
Cash flows from operating activities |
|
|
|
| |
|
|
|
|
| |
Loss before taxation |
| (983) | (520) | (568) | |
Adjustments for: |
|
|
|
| |
Depreciation and amortisation |
| 51 | 46 | 92 | |
Finance income |
| (1) | (6) | (13) | |
Transfers to equity reserves |
| 1 | 1 | 2 | |
Decrease in trade and other receivables |
| 122 | 386 | 317 | |
Increase in inventories |
| (20) | (123) | (65) | |
Decrease in trade and other payables |
| (54) | (111) | (32) | |
|
|
|
|
|
|
Cash used in operations |
| (884) | (327) | (267) |
|
|
|
|
|
|
|
Net cash outflow from operating activities |
| (884) | (327) | (267) |
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
|
|
|
Proceeds from share issue |
| 694 | 98 | 98 |
|
Dividend paid |
| - | (91) | (91) |
|
Purchase of property, plant and equipment and intangible assets |
| (114) | (5) | (7) |
|
Finance income |
| 1 | 6 | 13 |
|
|
|
|
|
|
|
Net cash inflow from investing activities |
| 581 | 8 | 13 |
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents | (303) | (319) | (254) |
| |
Cash and cash equivalents at beginning of period | 1,171 | 1,425 | 1,425 |
| |
Cash and cash equivalents at end of period | 868 | 1,106 | 1,171 |
| |
Sabien Technology Group Plc
Unaudited Condensed Group Statement of Changes in Equity as at 31 December 2015
| Share capital | Share premium | Shares to be issued | Share based payment reserve | Retained earnings | Total equity |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
Balance at 1 July 2014 | 1,574 | - | 38 | 163 | 954 | 2,729 |
|
|
|
|
|
|
|
Share issue on exercise of warrants | 76 | 22 | (38) | - | 38 | 98 |
Dividend paid | - | - | - | - | (91) | (91) |
Loss for the period 1 July 2014 to 31 December 2014 | - | - | - | - | (520) | (520) |
Employee share option scheme - value of services provided | - | - | - | 1 | - | 1 |
Balance at 31 December 2014 | 1,650 | 22 | - | 164 | 381 | 2,217 |
|
|
|
|
|
|
|
Loss for the period 1 January 2015 to 30 June 2015 | - | - | - | - | (263) | (263) |
Employee share option scheme - value of services provided | - | - | - | 1 | - | 1 |
Balance at 30 June 2015 | 1,650 | 22 | - | 165 | 118 | 1,955 |
|
|
|
|
|
|
|
Loss for the period 1 July 2015 to 31 December 2015 | - | - | - | - | (983) | (983) |
Share issue | 550 | 144 | - | - | - | 694 |
Employee share option scheme - value of services provided | - | - | - | 1 | - | 1 |
Balance at 31 December 2015 | 2,200 | 166 | - | 166 | (865) | 1,667 |
Sabien Technology Group Plc
Notes to the Financial Statements for the period ended 31 December 2015
1. Accounting policies
The interim financial information has not been audited or reviewed by the auditors and does not constitute statutory accounts for the purpose of Sections 434 and 435 of the Companies Act 2006.
The financial information in this document has been prepared using accounting principles generally accepted under International Financial Reporting Standards and is consistent with those used in the preparation of the most recent annual financial statements.
The following significant principal accounting policies have been used consistently in the preparation of the consolidated financial information of the Group. The consolidated information comprises the Company and its subsidiaries (together referred to as "the Group").
a) Basis of Preparation: The financial information in this document has been prepared using accounting principles generally accepted under International Financial Reporting Standards ("IFRS"), as adopted by the European Union.
The directors expect to apply these accounting policies which are consistent with International Financial Reporting Standards in the Group's Annual Report and Financial Statements for all future reporting periods.
The directors believe that the Group is a going concern and have accordingly prepared these financial statements on a going concern basis.
The interim consolidated financial statements have been prepared on the historical cost basis and are presented in £'000 unless otherwise stated.
b) Basis of consolidation: The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) at 31 December 2015. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefit from its activities.
Except as noted below, the financial information of subsidiaries is included in the consolidated financial statements using the acquisition method of accounting. On the date of acquisition the assets and liabilities of the relevant subsidiaries are measured at their fair values.
All intra-Group transactions, balances, income and expenses are eliminated on consolidation.
Accounting for the Company's acquisition of the controlling interest in Sabien Technology Limited: The Company's controlling interest in its directly held subsidiary, Sabien Technology Limited, was acquired through a transaction under common control, as defined in IFRS 3 Business Combinations. The directors note that transactions under common control are outside the scope of IFRS 3 and that there is no guidance elsewhere in IFRS covering such transactions.
IFRS contain specific guidance to be followed where a transaction falls outside the scope of IFRS. This guidance is included at paragraphs 10 to 12 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. This requires, inter alia, that where IFRS does not include guidance for a particular issue, the directors may also consider the most recent pronouncements of other standard setting bodies that use a similar conceptual framework to develop accounting standards. In this regard, it is noted that the UK standard FRS 6 addresses the question of business combinations under common control.
In contrast to IFRS 3, FRS 6 sets out accounting guidance for transactions under common control. The guidance contained in FRS 6 indicates that merger accounting may be used when accounting for transactions under common control.
Having considered the requirements of IAS 8, and the guidance included in FRS 6, it is considered appropriate to use a form of accounting which is similar to pooling of interest when dealing with the transaction in which the Company acquired its controlling interest in Sabien Technology Limited.
In consequence, the consolidated financial statements for Sabien Technology Group Plc report the result of operations for the year as though the acquisition of its controlling interest through a transaction under common control had occurred at 1 October 2005. The effect of intercompany transactions has been eliminated in determining the results of operations for the year prior to acquisition of the controlling interest, meaning that those results are on substantially the same basis as the results of operations for the year after the acquisition of the controlling interest.
Similarly, the consolidated balance sheet and other financial information have been presented as though the assets and liabilities of the combining entities had been transferred at 1 October 2005.
The Group took advantage of Section 131 of the Companies Act 1985 and debited the difference arising on the merger with Sabien Technology Limited to a merger reserve.
c) Property, plant and equipment: Property, plant and equipment are stated at cost less accumulated depreciation. Assets are written off on a straight-line basis over their estimated useful life commencing when the asset is brought into use. The useful lives of the assets held by the Group are considered to be as follows:
Office equipment, fixtures and fittings 3-4 years
d) Intangible assets: Intellectual property, which is controlled through custody of legal rights and could be sold separately from the rest of the business, is capitalised where fair values can be reliably measured.
Intellectual property is amortised on a straight line basis evenly over its expected useful life of 20 years.
Impairment tests on the carrying value of intangible assets are undertaken:
· At the end of the first full financial year following acquisition
· In other periods if events or changes in circumstances indicate that the carrying value may not be fully recoverable.
If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Recoverable amount is the higher of the fair value, less costs to sell, and value in use. In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but only in so far that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised in income immediately.
e) Fixed asset investments: Fixed asset investments are stated at cost less any provision for impairment in value.
f) Inventories: Inventories are valued at the lower of average cost and net realisable value.
g) Financial Instruments
Financial Assets
The Group classifies its financial assets as loans and receivables and cash. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non-current assets.
Trade receivables are classified as loans and receivables and are recognised at fair value less provision for impairment. Trade receivables, with standard payment terms of between 30 to 65 days, are recognised and carried at the lower of their original invoiced and recoverable amount. Where the time value of money is material, receivables are carried at amortised cost. Provision is made when there is objective guidance that the Group will not be able to recover balances in full. Balances are written off when the probability of recovery is assessed as being remote.
Financial Liabilities
The Group classifies its financial liabilities as trade payables and other short term monetary liabilities. Trade payables and other short term monetary liabilities are recorded initially at their fair value and subsequently at amortised cost. They are classified as non-current when the payment falls due more than 12 months after the balance sheet date.
h) Cash and Cash Equivalents
Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short term highly liquid investments with original maturities of three months or less, and bank overdrafts.
i) Revenue recognition: Revenue from sale of goods is recognised upon delivery and installation at a customer site or delivery to a customer's incumbent facilities manager which subsequently carries out the installation itself. Where goods are delivered to overseas distributors, revenue is recognised at the time of shipment from the Company's warehouse.
Revenue from services generally arises from pilot projects for customers and is recognised once the pilot has been completed and the results notified to the customer. Pilot projects generally have a duration of between 1 and 3 months.
Revenue is shown net of value-added tax, returns, rebates and discounts and after eliminating sales within the Group.
Interest income is accrued on a time basis by reference to the principal outstanding and at the effective interest rate applicable.
j) Share-based payments: The Group has applied the requirements of IFRS2 Share-based Payments. The Group issues options to certain employees. These options are measured at fair value (excluding the effect of non-market based vesting conditions) at the date of grant. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period based on the Group's estimate of the shares that will eventually vest and adjusted for the effect of non-market based vesting conditions.
Fair value is measured by use of the Black-Scholes model. The expected life used in the model has been adjusted, based on management's best estimate for the effects of non-transferability, exercise restrictions and behavioural conditions.
k) Operating leases: Rentals applicable to operating leases where substantially all of the benefits and risks of ownership remain with the lessor are charged to the statement of comprehensive income on the straight line basis over the lease term.
l) Taxation: The charge for current tax is based on the results for the period as adjusted for items that are non-assessable or disallowed. It is calculated using rates that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis used in the computation of taxable profit. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction which affects neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interest in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax is calculated at the rates that are expected to apply when the asset or liability is settled. Deferred tax is charged or credited in the statement of comprehensive income, except when it relates to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.
2. Segmental reporting
Based on risks and returns, the directors consider that the primary reporting business format is by business segment which is currently just the supply of energy efficiency products, as this forms the basis of internal reports that are regularly reviewed by the company's chief operating decision maker in order to allocate resources to the segment and assess its performance. Therefore the disclosures for the primary segment have already been given in these financial statements. The secondary reporting format is by geographical analysis by destination. Non-UK revenues amounted to £69k which were 22% of total revenues for the period.
During the period, sales to the Group's largest customers were as follows:
| Sales revenue | % of total revenue |
| £'000 |
|
Customer 1 | 56 | 17% |
Customer 2 | 42 | 13% |
Customer 3 | 38 | 12% |
|
|
|
3. Taxation
At 30 June 2015, the Group reviewed the carrying value of the deferred tax asset recognised in previous years and decided that it would be prudent to derecognise the total asset in view of the uncertainty as to the timing of a return to profitability.
4. Earnings per share (EPS)
The calculation of the basic earnings per share is based on the earnings attributable to the ordinary shareholders, divided by the weighted average number of shares in issue in the period.
|
|
|
|
| 6 months to 31 December 2015 | 6 months to 31 December 2014 | Year to 30 June 2015 |
| £'000 | £'000 | £'000 |
Loss for the period | (983) | (520) | (783) |
Basic and Diluted: |
|
|
|
Weighted average number of shares in issue | 42,171,534 | 32,751,508 | 32,878,337 |
Loss per share - basic and diluted | (2.3)p | (1.6)p | (2.4)p |
|
|
|
|
5. Share capital
The Company's issued Ordinary share capital is:
| Amount | Number of Ordinary Shares |
|
|
|
Allotted, called up and fully paid: |
|
|
At 31 December 2015
| £2,200,243 | 44,004,867 |
At 31 December 2014 and 30 June 2015 | £1,650,243 | 33,004,867 |
On 3 August 2015, the Company raised £770k gross by the issue of 11,000,000 Ordinary shares of 5p each at a price of 7p per share. Net proceeds after expenses amounted to £694k.
6. Seasonality
The business of the Group is not seasonal.