Sabien Tech. Regulatory News (SNT)

29 March 2017

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

£475,000 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") 47,500,000 new ordinary shares of 0.5 pence each (the "Placing Shares") at 1 penny per Placing Share raising £475,000 (before expenses) for the Company. Stockdale Securities Limited ("Stockdale") and Daniel Stewart and Co. have acted as brokers on the Placing. The placing is dependent on ratification at a General Meeting, to be called later today, of resolutions to permit the Directors of the Company to allot the Placing Shares.

Highlights

· Placing of 47,500,000 Placing Shares at 1 penny per share to raise £475,000 from institutional and other investors.

· Admission to trading on AIM expected on 19 April 2017 subject to approval of resolutions at a General Meeting to permit the Directors of the Company to allot the Placing Shares.

· 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 continuing pilots of M2G, our boiler load optimisation control and 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. Public procurement delays in the receipt of orders have had a major impact on our business' cashflow and we are grateful to our investors who continue to have confidence in the strategy that we have been following for the past 2 years. We are confident that the strategy is the correct course to follow and that material orders should be received over the next few months."

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Background to and reasons for the Placing

At the AGM update on 29 November 2016, the Company reported that, at the time of the placing in September 2016, orders of £500k, expected to be received in June or July 2016, were expected to be received in the 2nd quarter of the current financial year and that although these orders had not been received yet, discussions with the clients involved indicate they were still current and were expected in the 2nd or 3rd quarters of the financial year to June 2017. Continuing delays in the receipt of these orders have had a major impact on the business and have resulted in a further call on the shareholders for their support. The Company is confident, however, that these orders will be received over the coming months.

The Company is also confident that its free pilot strategy, in which 35 pilots were carried out in the last financial year to 30 June 2016, will result in an increasing order quotation book over the next few months. The Company is currently in active discussion with 16 piloted clients and the average business case value submitted to them is c£350k.

The Company's target in the current financial year to 30 June 2017 is to carry out 40 pilots in the UK and overseas. It is pleased to report that there are currently 44 product pilots in this programme. These product pilots comprise the Company's M2G boiler optimisation control and Endotherm, a liquid additive for commercial heating systems for which the Company act as sole distributor 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.

The Company's sales quotation pipeline currently stands at £9.7m which compares with £12m at the time of the announcement of the Company's annual results in October 2016. Orders of £475k have 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 continuation of the pilot programme for both M2G and EndoTherm and (ii) 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 and Daniel Stewart and Co. The Placing Shares will, when issued, rank pari passu with the Company's existing issued ordinary shares. It is expected that Application will be made for admission to trading on AIM ("Admission") of the Placing Shares and it is expected that, subject to the passing of the requisite resolutions at the General Meeting to be held on 18 April 2017, Admission will occur on or around 19 April 2017.

Following Admission, the total enlarged issued share capital of the Company will be 110,254,867 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 Guidance 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, approval of the requisite resolutions at the General Meeting to be held on 18 April 2017 and Admission becoming effective and the placing agreement between the Company and Stockdale 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 in the Placing by subscribing for 9,250,000 and 1,000,000 Placing Shares respectively.

As a result of his participation in the Placing, following Admission, Bruce Gordon will hold 14,745,000 Ordinary Shares directly, which will represent 13.4% 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 3.7% of the Enlarged Share Capital. Bruce Gordon will therefore be interested, directly and indirectly, in 18,853,356 Ordinary Shares, representing 17.1% of the Enlarged Share Capital.

As a result of his participation in the Placing, following Admission, Karl Monaghan will hold 2,522,495 Ordinary Shares, representing 1.8% of the Enlarged Share Capital.

Related Party Transactions

The participation in the Placing by Bruce Gordon and Karl Monaghan in aggregate and the participation by Amati Global Investors, a substantial shareholder of the Company are deemed related party transactions 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, that the terms of Bruce Gordon's, Karl Monaghan's and Amati Global Investors' participations in the Placing are fair and reasonable insofar as the Company's shareholders are concerned.