Last checked at 28 Oct 2009 07:00
28 October 2009
Sabien Technology Group Plc
("Sabien')
Preliminary results for the 12 months ended 30 June 2009
Sabien (AIM: SNT) announces its preliminary results for the year ended 30 June 2009.
Sabien is focused on the manufacture and sale of M2G and M3G energy saving devices which are proven to reduce energy consumption on commercial boilers and air conditioning units by up to 35%.
Key Points:
During the year:
Continuing implementation of Project 10
£188k order from Aviva
Orders from public sector including Department of Communities and Local Government, Keele University, South Derby District Council, Bradford City Council, Environment Agency and National Archives
Orders from private sector including Aviva, Virgin Media, Marriott Hotels and Vodafone
Received UL approval for M2G for sale in the USA
£100k order from US distributor
Highlights since the year end:
Received first order from British Telecom for £118k
Orders received from Marriott Hotels, Lubrizol, Keele University, RAF, Vodafone, Aston University and NHS
Alliance Agreements for the distribution of M2G entered into with Jones Lang LaSalle, Serco, Balfour Beatty, British Gas
Current prospective pipeline stands at 3,000 units
£1.475 million raised through equity placing and all external debt repaid
For further information:
| Sabien Technology Group plc Alan O'Brien - Chief Executive Officer Gus Orchard - Finance Director | 020 7993 3700 |
| Arbuthnot Securities (NOMAD) Antonio Bossi | 020 7012 2000 |
CHAIRMAN'S STATEMENT
I am pleased to report on the results for Sabien Technology Group Plc ("Sabien", "the Company" or "the Group") for the year ended 30 June 2009.
Market development
Sabien was set up in 2004 to commercialise M2G, an energy saving technology which reduces gas consumption in commercial boilers. In March 2009, Sabien obtained Underwriters Laboratories (UL) approval to sell M2G in the USA.
The opportunities for Sabien continue to be positive with increasing legislation, in particular the Carbon Reduction Commitment in the UK which becomes effective on 1 April 2010, volatile energy prices and commitments to reduce carbon emissions, all driving interest and demand for our products from public and private sector organisations.
Progress to date
Since the Company floated in 2006, it has worked hard to become a leader in the area of boiler energy efficiency. Pilot projects have been undertaken with a number of large organisations in order to show them the carbon and monetary efficiencies that can be obtained by using M2G. As I noted in my report last year, the results of the initial M2G pilot projects had resulted in an order from Aviva for £188k and the creation of a strong sales pipeline. Further pilot projects were carried out during the year and have again generated great interest. While it has taken longer than initially foreseen to turn this interest into orders, the Company believes that this interest will succeed in generating substantial future revenues.
Since the year end, orders have been received from two of the UK's leading telecommunication service providers for £168k and there has been a continued flow of business from new and existing customers.
Our list of blue-chip clients, both public and private sector, continues to grow despite the economic conditions prevalent during the course of the past year. During the year, M2G units were installed at Aviva, Virgin Media, the Department of Communities and Local Government, Derby and Keele Universities. We have also seen a large upturn in interest from Facilities Management companies whose customers require energy savings to be made and, as announced in August and September this year, we have entered into agreements and started a number of projects with organisations such as Serco, British Gas, Jones Lang LaSalle and Balfour Beatty.
Financial Results
Turnover in the year was £675k compared with £681k for the same period last year. The comparable turnover for the year to 30 June 2008 included £395k of sales to the Royal Bank of Scotland; as expected, sales in the year to 30 June 2009 to this client were minimal. The loss after taxation was £825k compared with £612k (as restated) in the same period in 2008.
At 30 June 2009, cash and cash deposits amounted to £525k (2008: £1.3m). Management of cash is important for the group and expenditure is strictly controlled.
Since the year end, in August 2009 the Company has successfully refinanced its short term debt to General Capital Venture Finance Ltd with a two year term loan from funds advised by Thames Valley Capital Ltd ("TVC"). As part of this transaction, the Company has granted warrants to this company amounting to 10% of the enlarged share capital of the Company. This is explained in greater detail in the Notes to the Financial Statements.
Additionally in October 2009, in order to strengthen the balance sheet and provide additional working capital, the Group carried out a placing of shares which raised £1.475 million gross. £400,000 of this placing has been used to repay TVC's loan and this in turn has reduced the number of warrants granted by almost 50%.
Strategy
Sabien's strategy is to become the supplier of choice for private and public sector organisations that are faced with delivering on their energy and carbon strategies. The Company is continuing with this objective of delivering its commercially viable energy-efficiency technology both in the UK and overseas to a wider base of blue-chip clients.
The Company continues to invest in its brand which is providing a foundation for it to become recognised as a provider of leading energy-efficiency technology for multi-site organisations in both the public and private sectors. It has been approved for the London Green 500 initiative and has recently received ETV (Environment Technology Verification) status.
Board, Management and People
To ensure the Company has the right team in place, experienced sales and operations personnel have been recruited to ensure the on-going high levels of service we provide our customers. These positions are fully integrated into the business and the Company has the right structure and vision to ensure continued growth.
The Board remains confident that Sabien will experience strong growth by meeting the demands that both public and private organisations are now facing to reduce carbon emissions.
Dr Clive Morton OBE
Chairman
28 October 2009
Chief Executive Officer's Report
Introduction
I am pleased to present the Group's final results for the year ended 30 June 2009 during which, despite the tough economic conditions, the Group has continued to make steady progress in developing its reputation as a proven technology provider while also developing its direct and indirect sales capabilities. The Group continues to invest in its direct sales model and is expecting strong interest from companies forced to act in anticipation of the Government's challenging new Carbon Reduction Commitment legislation which comes into force in April 2010.
Overview
The Group has felt the effects of the economic downturn; however, we have adjusted our sales strategy to counteract these effects as much as possible. We recognised that in the current climate some of our major clients have been bought or sold or have used the downturn as an opportunity to re-organise their resources by downsizing which has resulted in job losses amongst decision makers and key influencers in these companies. This has had a knock on effect in terms of sales lead times for Sabien. However all clients in our pipeline have expressed their commitment to deploying M2G.
The Carbon Reduction Commitment ("CRC") is a mandatory cap and trade scheme starting in April 2010 requiring companies to purchase allowances from the government for their CO² emissions. All companies with half-hourly meters ("HHMs") whose electricity consumption during 2008 exceeded 6,000 MWh (a cost of around £500,000) will have to participate. A league table will be published each year showing the performance of each participant and the revenue raised from the sale of allowances will be "recycled" back to those with the best results. We expect the financial and economic drivers of the CRC to increase interest and deployment of our technology.
During the year, the business has received a number of significant orders from its direct sales channel while at the same time developing its indirect channels by entering into alliance agreements for the supply of M2G with Serco, British Gas, Balfour Beatty and Jones Lang LaSalle. Already we are beginning to receive customer enquiries and sales from these alliances. Our sales strategy will continue to focus on aligning ourselves with established service suppliers who have a ready made market in the demand for proven energy efficient technology.
In order to protect and drive shareholder value, we will continue our focus on delivering sales of M2G via our various sales channels here in the UK and in the US while managing our running costs and extracting maximum benefit from our cash utilisation. At the year end, the Group had £0.5 million in the bank and, as mentioned in the Chairman's statement, has raised a further £1.475m since then. With a cash utilisation of around £100k per month, the Group is confident that it has sufficient resources to attain profitability in the short to medium term.
Project 10
Over the past 2 years, we have set in place our well publicised Project 10 initiative to help shorten the decision making process of our potential customers while overcoming buyer technology adoption issues. The project, which is paid for in full by our clients, has also been successful in terms of helping them identify where they could make substantial energy savings with quick payback. As part of this initiative, we agreed to install M2Gs at up to 3 sites in each of 10 large prospective customers and to monitor the results obtained from the M2Gs over the heating season for periods of up to 3 months. At the end of the pilot period, a report is produced for each customer in which are presented the results of the pilot and the likely levels of savings in energy and CO2 emission savings that could be achieved if M2G was deployed over the client's estate of buildings.
As noted last year, Aviva placed an initial order with Sabien for M2G worth £188k. As part of the ongoing relationship with Aviva, we were asked during the year to provide a methodology for validating the savings achieved over the entire estate. We completed this exercise successfully and the results indicated that Aviva has been achieving overall savings of 12% with a payback of 56 weeks since the roll-out of the M2G product.
Other organisations have likewise been able to verify independently the level of savings achieved by M2G. The first phase roll out of the British Telecom order comes as a direct result of a Project 10 pilot which delivered savings in energy consumption and CO2 emissions of up to 36%. Sabien's measurement and monitoring package for calculating and verifying savings was independently observed and verified by AEA Technology, a leading energy and climate change consultancy which was retained by BT.
Owing to the economic downturn and introduction of legislation we have noticed delays in the placing of orders from participants in the Project 10 programme. This has been brought about by spending moratoriums, introduction of CRC and further amendments, job losses and integration programmes; however, we are confident that substantial revenues will arise from the programme as we are in constant contact with all our prospective customers.
We will yet again be running the Project 10 pilot exercise this coming winter heating season and are already fully subscribed with a number of well-known UK multi-site organisations.
Operational progress
We continue to develop and strengthen our technical expertise in the energy efficiency market and to help our customers reduce energy and carbon emissions.
During the year we received both confirmation of the grant of a European patent in respect of M2G (under number 1607820) and Underwriters Laboratories ("UL") certification to enable distribution of the M2G product in the US. As noted above, we have already received an order for £100k from our US distributor, Greffen Systems. Greffen's model has been to carry out pilot installations for a varied clientele ranging from banks to public sector entities. The US has not been immune from the economic downturn and Greffen has experienced delays in the placing of orders. However, they are confident of receiving orders in the months ahead.
Since the year end, we have also achieved Environmental Technology Verification ("ETV"). ETV is a European Union initiative which provides technology users with reliable information about environmental performance so as to accelerate market acceptance of innovative technologies and is based on similar initiatives in the US and Canada.
To meet the increasing demand for our technology, we have contracted ROMEC, one of the UK's leading Facilities Management providers, to be our installation partner. Combined with Sabien's project management capabilities, the partnership enables us to deploy M2G anywhere in the UK regardless of the number of clients or the size of their estates.
Team Development
I would like to thank my fellow directors and all the Company employees whose efforts have contributed to the progress of the company over the last twelve months. Their efforts and personal sacrifices have not gone unnoticed.
Outlook
This last year has been challenging for the company but I believe we are better positioned than ever. We continue to win substantial contracts and, despite the difficulties mentioned above, our prospective pipeline for the installation of M2G's has grown from a low base this time last year to approximately 3,000 devices currently. This pipeline, together with the growth in our alliance network which contains some of the leading service suppliers in the UK is a strong endorsement of our technology and of our people. The introduction of the CRC legislation and the continued focus on managing utility spend will continue to create a great level of interest in our products and our internal forecasts indicate that 2009/10 may well be our breakthrough year.
Alan O'Brien
Chief Executive Officer
28 October 2009
Consolidated Income Statement
For the year ended 30 June 2009
| 2009 | 2008 | ||||
| Notes | £'000 | £'000 | £'000 | £'000 | |
| as restated | |||||
| Revenue | 675 | 681 | |||
| Cost of sales | (102) | (164) | |||
| Gross profit | 573 | 517 | |||
| Other income | 5 | 26 | 102 | ||
| Distribution costs | (201) | (211) | |||
| Administrative expenses (as previously reported) | (1,178) | (1,233) | |||
| Prior year adjustment | 3 | - | 147 | ||
| Administrative expenses (as restated) | (1,178) | (1,086) | |||
| Finance costs (as previously reported) | (45) | (155) | |||
| Prior year adjustment | 3 | - | 221 | ||
| Finance costs (as restated) | 6 | (45) | 66 | ||
| Loss before tax | 4 | (825) | (612) | ||
| Corporation tax | 7 | - | - | ||
| Loss for the year attributable to equity holders of the parent company | (825) | (612) | |||
| Loss per share in pence - basic and diluted | 8 | (3.1) | (2.3) | ||
Consolidated and Company Balance Sheet
As at 30 June 2009
| Group | Company | ||||
| 2009 | 2008 | 2009 | 2008 | ||
| Notes | £'000 | £'000 | £'000 | £'000 | |
| as restated | as restated | ||||
| ASSETS | |||||
| Non-current assets | |||||
| Property, plant and equipment | 34 | 47 | - | - | |
| Intangible assets | 864 | 1,175 | - | - | |
| Investment in subsidiaries | - | - | 544 | 1,024 | |
| Total non-current assets | 898 | 1,222 | 544 | 1,024 | |
| Current assets | |||||
| Inventories | 137 | 121 | - | - | |
| Trade receivables | 118 | 151 | - | - | |
| Other current assets | 44 | 58 | 133 | 256 | |
| Cash and cash equivalents | 525 | 1,274 | 510 | 1,264 | |
| Total current assets | 824 | 1,604 | 643 | 1,520 | |
| LIABILITIES | |||||
| Current liabilities | |||||
| Trade and other payables | 35 | 24 | 2 | - | |
| Short term provisions | 574 | 135 | 513 | 24 | |
| Total current liabilities | 609 | 159 | 515 | 24 | |
| Non-current liabilities | |||||
| Long-term borrowings | - | 451 | - | 451 | |
| Long-term provisions | 222 | 527 | 222 | 527 | |
| Total non-current liabilities | 222 | 978 | 222 | 978 | |
| Net Assets | 891 | 1,689 | 450 | 1,542 | |
| EQUITY | |||||
| Equity attributable to equity holders of the parent | |||||
| Share capital | 1,329 | 1,329 | 1,329 | 1,329 | |
| Other reserves | 1,649 | 1,622 | 2,420 | 2,392 | |
| Retained (losses)/earnings | (2,087) | (1,262) | (3,299) | (2,179) | |
| Total equity | 891 | 1,689 | 450 | 1,542 | |
Consolidated and Company Cash Flow Statement
For the year ended 30 June 2009
| Group | Company | |||
| 2009 | 2008 | 2009 | 2008 | |
| as restated | as restated | |||
| £'000 | £'000 | £'000 | £'000 | |
| Cash flows from operating activities | ||||
| Loss before taxation | (825) | (612) | (1,120) | (759) |
| Adjustments for: | ||||
| Depreciation and amortisation | 40 | 1 | - | - |
| Impairment provision | 288 | 1,350 | 1,280 | 2,261 |
| Reduction in long term provisions | (287) | (1,350) | (287) | (1,350) |
| Finance income | (26) | (102) | (57) | (162) |
| Finance expense | 45 | (66) | 45 | (66) |
| Transfers to equity reserves | 27 | 21 | 28 | 22 |
| Decrease/(Increase) in trade and other receivables | 47 | (73) | 123 | (2) |
| Decrease in inventories | (16) | (50) | - | - |
| Increase/(Decrease) in trade and other payables | 450 | (63) | 491 | (23) |
| Cash generated from operations | (257) | (944) | 503 | (79) |
| Corporation taxes recovered/(paid) | - | 13 | - | - |
| Net cash (outflow)/inflow from operating activities | (257) | (931) | 503 | (79) |
| Cash flows from investing activities | ||||
| Investment in subsidiary company | - | - | (800) | (900) |
| Purchase of property, plant and equipment | (4) | (15) | - | - |
| Finance income | 26 | 102 | 57 | 162 |
| Net cash generated by/(used in) investing activities | 22 | 87 | (743) | (738) |
| Cash flows from financing activities | ||||
| (Repayment of)/proceeds from long term borrowings | (514) | (30) | (514) | (30) |
| Net cash from financing activities | (514) | (30) | (514) | (30) |
| Net increase/(decrease) in cash and cash equivalents | (749) | (874) | (754) | (847) |
| Cash and cash equivalents at the beginning of the year | 1,274 | 2,148 | 1,264 | 2,111 |
| Cash and cash equivalents at the end of the year | 525 | 1,274 | 510 | 1,264 |
Notes to the Financial Statements
1. Basis of Preparation
The results for the year are preliminary and unaudited.
While the financial information included in this interim announcement has been computed in accordance with International Financial Reporting Standards (IFRS), this announcement does not itself contain sufficient information to comply with IFRS. The full financial statements of the company will be prepared in accordance with IFRS, International Accounting Standards and their interpretations issued or adopted by the International Accounting Standards Board as adopted for use in the European Union. No adjustments have been required to restate opening balances from UK GAAP to IFRS.
The financial statements have been prepared on the historical cost basis. The consolidated financial statements are presented in £'000 unless otherwise stated.
The Company has raised £1.475m via a placing to the market after the year end. The directors therefore feel that the Group is a going concern and have accordingly prepared these financial statements on a going concern basis.
The preliminary announcement was approved by the Board of Directors on 28 October 2009.
2. Basis of Consolidation
The consolidated balance sheet and income statement includes the financial statements of the Company and its subsidiaries at 30 June 2009. The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 30 June each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.
Business combinations involving entities under common control fall outside the scope of IFRS and are consolidated using merger accounting under which the group incorporates the assets and liabilities of the entities at the amounts recorded in the books of the entities. No goodwill arises on consolidation and any difference arising from the use of merger accounting is included in equity as a merger reserve.
The consolidated financial information incorporates the combined companies' results as if the companies had always been combined.
In respect of other business combinations fair values are attributed to the net assets acquired. Goodwill, which represents the difference between the purchase consideration and the fair value of the net assets acquired, is capitalised and subject to an impairment review at least annually or more frequently if events or changes in circumstances indicate that the goodwill may be impaired.
3. Prior year adjustment
| The prior year adjustment has arisen as a result of a recalculation of amortisation and interest charges which should have been processed in the year to 30 June 2008 as a result of the impairment review carried out at that date. | ||
| Group | Year ended 30 June 2009 | Year ended 30 June 2008 |
| £'000 | £'000 | |
| Correction of error in calculation of amortisation of Intellectual Property | - | 147 |
| Correction of error in calculation of interest in respect of deferred consideration | - | 221 |
| Increase in retained earnings | - | 368 |
| Company | ||
| Correction of error in calculation of interest in respect of deferred consideration | - | 221 |
| Increase in retained earnings | - | 221 |
4. Loss before tax
The loss before tax is stated after charging/(crediting):
| Year ended 30 June 2009 | Year ended 30 June 2008 | |
| as restated | ||
| £'000 | £'000 | |
| Depreciation of owned tangible fixed assets | 17 | 15 |
| Amortisation of intangible assets | 23 | (14) |
| Operating lease rentals - land and buildings | 31 | 28 |
5. Finance income
| Year ended 30 June 2009 | Year ended 30 June 2008 | |
| £'000 | £'000 | |
| Interest receivable | 26 | 102 |
6. Finance expense
| Year ended 30 June 2009 | Year ended 30 June 2008 | |
| £'000 | £'000 | |
| As restated | ||
| Interest payable (as previously reported) | 45 | 155 |
| Prior year adjustment (note 3) | - | (221) |
| Interest payable | 45 | (66) |
7. Corporation tax
| Year ended 30 June 2009 | Year ended 30 June 2008 | |
| £'000 | £'000 | |
| as restated | ||
| Current tax | - | - |
| Deferred tax | - | - |
| Total tax recovery for the year | - | - |
| The tax recovery for the year can be reconciled to the loss per the income statement as follows: | ||
| Loss before tax | (825) | (612) |
| Tax on loss on ordinary activities at standard UK corporation tax rate of 21% (2008: 20%) | (173) | (122) |
| Expenses not deductible for tax purposes | 3 | 11 |
| Capital allowances in excess of depreciation | 1 | - |
| Other short term timing differences | 152 | 84 |
| Unrelieved tax losses | 17 | 27 |
| Current tax recovery | - | - |
No provision has been made to recognise a deferred tax asset as future profitability is uncertain.
8. Loss per share
The calculation of loss per share is based on the loss for the year attributable to equity holders of £825k (2008: £612k as restated) and a weighted average number of shares in issue during the period of 26,570,511 (2008: 26,570,511). At the year end options over 1,333,622 shares were in issue. These options have not been taken into account in calculating loss per share as they are anti-dilutive.
The financial information above for the years ended 30 June 2008 and 2009, in respect of which the accounting policies are consistent, does not constitute the statutory financial statements for those years. It is anticipated that the annual report and accounts for the year ended 30 June 2009 together with a notice of Annual General Meeting to be held at The Reform Club, 104 Pall Mall, London SW1Y 5EW at 11.00 a.m. on 25 November 2009 will be posted to shareholders on or around 2 November 2009. Copies will be available from the Company Secretary, Sabien Technology Group Plc, 34 Clarendon Road, Watford, Herts WD17 1JJ and on the Company's website, www.sabien-tech.co.uk.