TIDMSNT
RNS Number : 4587E
Sabien Technology Group PLC
10 February 2015
10 February 2015
Sabien Technology Group Plc
("Sabien" or the "Group")
Unaudited Interim Results for the period to 31 December 2014
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 2014
(comparatives are shown for the same period in the previous year
unless otherwise stated):
Highlights in the period
-- Sales revenue GBP542k (2013/14 - GBP924k) with high gross margins maintained
-- Sales orders received GBP610k (2013/14: GBP879k)
-- Loss before tax GBP521k (2013/14 - GBP245k loss)
-- Net cash at the end of the period was GBP1,106k (GBP1,425k at 30 June 2014)
-- Final dividend GBP91k (2013/14 - GBP79k) paid in November
-- Sales pipeline of GBP6.9m (GBP6.9m at October 2014's update)
-- Tender award from Lincolnshire County Council (October 2013)
- GBP126k revenue from this contract recognised in period. Further
GBP1.1m revenue expected to be recognised by the end of this
financial year
-- New contract wins in the 6 months included NHS Scotland
Ayrshire & Arran, Durham County Council, Northumbria Healthcare
NHS, Jones Lang Lasalle, Sidney Sussex College, Dumfries &
Galloway Council
-- Recruitment of 2 additional Business Development Managers
bringing team to 5 in total
-- Sales from indirect partners 24% of total sales revenue (2013/14: 44%)
-- Overseas sales GBP121k (2013/14: GBP66k) - Non-exclusive
distribution agreements signed with Tech Centres in China,
Malaysia, Taiwan, Thailand, Indonesia, Brazil, Lithuania, Latvia,
Estonia
-- Launch in September 2014 of M1G retrofit control for hot
water heaters. First orders received from India Tech Centre
-- GBP146k of orders received since 1 January 2015 giving total
orders received for delivery this financial year of GBP2,000k
(2013/14 - GBP1,100k)
Chairman and Chief Executive Officer's Report
We are pleased to report on the performance of the Group in the
first half of the year.
Despite the anticipated reduced sales activity in the first half
the Board expects to deliver results for the full financial year in
line with its expectations due to a small number of large confirmed
and expected contracts. Additionally, the recent financial
commitment to strengthen our new business development is expected
to bear fruit in the second half of the year and this, allied to
our existing sales pipeline opportunities, provides reassurance
that a return to profitability can be achieved.
The Group has a proven repeatable business model and
management's efforts are now focussed on scaling this model in
order to smooth our earnings profile. The recruitment of two
business development managers in addition to the three recruited
last year plus the expansion of our overseas Tech Centre network
forms the pillars of our strategy.
The Group continues to identify and position itself for a number
of larger opportunities that will generate medium term revenue
growth. Some good progress has been made since our last update in
October 2014 and we look forward to confirming the results of these
discussions during the second half of the year.
The Group's balance sheet remains robust (end January 2015 net
cash remained at GBP1.1m) and there have been no other significant
changes to the financial position of the Group from that reported
in October 2014. We have a strong order book and are continuing to
grow our sales pipeline while also creating further opportunities
for revenue growth in overseas markets.
Marketplace and Business Drivers
Since June 2014, wholesale gas prices in Europe have fallen by
32% as the full effects of global deflation takes its toll upon
energy prices. The outlook for wholesale gas prices remains benign
with the futures market pointing to further pricing pressure into
the 2015 summer season with only a marginal uplift from spot levels
anticipated by late 2015.
In the light of cheaper utility costs, it could be expected that
energy efficiency implementation programmes would experience
reduced demand. To date, Sabien has not experienced a downturn in
customer enquiries, pilots and orders. Our customers are in the
main large public and private sector entities where cost reduction
remains a core focus.
The cost of green subsidies and taxes such as the Carbon
Reduction Commitment charges has increased by over 30% for each
tonne of carbon emitted by a participating Private or Public Sector
organisation which acts as an additional investment driver for
energy efficiency products while also adhering to good corporate
governance.
The market universe for commercial boilers in the UK is
estimated to be around 6 million and, to date, Sabien has sold
8,600 M2G units which indicates that it still has a substantial
market opportunity. Sabien is able to gear itself to take advantage
of this opportunity without incurring any major cost increases
through its on-going relationships with its sub-contract
installers.
Finance
The Group's turnover in the period was GBP542k (2013/4 -
GBP924k) and there was a loss before tax of GBP521k compared to a
loss of GBP245k in the same period last year. It is anticipated
that sales revenue will be back-end loaded this year similar to
what we experienced during the year ended 30 June 2014.
As at 31 December 2014, the Group's net cash reserves amounted
to GBP1,106k compared to GBP1,425k at 30 June 2014 and GBP1,582k at
31 December 2013. The Group's target is to hold at least 6 month's
worth of operating costs on current account and short term
deposit.
Current Trading
Since the period ended 31 December 2014, GBP146k of orders have
been received giving total orders received for the year to date of
GBP2,000k. Orders from indirect partners for the year to date
amount to GBP128k.
The sales pipeline currently stands at GBP6.9m. 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 GBP6.9m. 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 6 to 24 months. Sabien's experience is
that it can take between 6 to 18 months for a customer enquiry to
convert to a sales order.
Product and Sales Channel Update
Why Sabien M2G and M1G?
M2G is a proven patented boiler optimisation control that has
delivered verified cost-savings across numerous significant clients
including BT, Royal Mail, Lincolnshire County Council, Aviva,
Ministry of Defence, NHS, Standard Life, Marriott Hotels, Work
Space, Regus, and the Welsh Government.
Sabien outsources the manufacture of M2G to a manufacturer in
Northern Ireland and has the infrastructure in place to support the
sale and installation of 600-800 M2G units per month (GBP1-1.5m per
month).
What will lead to increased M2G, M1G sales and revenue?
The strategy is to grow UK and overseas sales revenue through
the addition of new Business Development Managers and the
appointment of further distribution partners in North America, and
the EMEA and APAC regions.
US M2G distributor Fireye has been selected as a Technology
Partner for the Los Angeles Better Building program. This is for
Fireye efficiency controls specifically including the Fireye NXM2G.
The aim is to seek selection to the Better Building program in
every major US city.
US distributor Greffen attained M2G validation from the US
Department of Energy. The US Department of Energy has confirmed
that the M2G intelligent boiler control produces significant
savings for heating buildings using hydronic boilers.
Since further strengthening our business development function,
we have started to see an increase in the pipeline momentum and
would expect these new business opportunities to progress through
the pipeline to support the Group.
The indirect sales channel will also grow as new partners are
established and some of our existing partners start to gain
material sales traction.
Following on from the brand awareness is the focus of
developing/acquiring additional products/services that also command
premium margins in the boiler/burner market. We are currently in
dialogue with boiler manufacturers regarding white labelling M2G
and M1G and with third party energy efficiency technology companies
with a view to adding their offering to our product suite.
Outlook
The Board anticipates that the trading performance will be in
line with its expectations for 2015.
Increased scale and the resulting smoothing of our performance
is still at an early stage. There is a great deal more work to do
and no doubt further challenges to overcome. Progress has been made
and the business is more focused and continues to be better placed
to deliver on its potential.
Miriam Maes 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
Westhouse Securities Limited
Antonio Bossi 020 7601 6100
Sabien Technology Group Plc
Unaudited Condensed Group Statement of Comprehensive Income for
the period ended 31 December 2014
Notes Year to
6 months 6 months 30
to 31 December to 31 December June
2014 2013 2014
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Revenue 542 924 2,139
Cost of Sales (172) (239) (633)
Gross Profit 370 685 1,506
Administrative expenses (896) (939) (1,815)
Operating Loss (526) (254) (309)
Investment revenues 6 9 16
Loss before tax (520) (245) (293)
Tax credit 3 - - 21
---------------- ---------------- --------
Loss for the period attributable
to equity holders of the
parent company (520) (245) (272)
Other comprehensive income
for the period - - -
---------------- ---------------- --------
Total comprehensive income
for the period (520) (245) (272)
================ ================ ========
(Loss)/Earnings per share
in pence - basic 4 (1.6)p (0.8)p (0.9)p
(Loss)/Earnings per share
in pence - diluted 4 (1.6)p (0.7)p (0.9)p
Sabien Technology Group Plc
Unaudited Condensed Group Statement of Financial Position as at
31 December 2014
Notes 31 December 31 December 30 June
2014 2013 2014
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
ASSETS
Non-current assets
Property, plant and equipment 88 115 106
Other intangible assets 532 578 555
Deferred tax 3 215 - 215
------------ ------------ ---------
Total non-current assets 835 693 876
------------ ------------ ---------
Current assets
Inventories 265 125 142
Trade and other receivables 213 454 599
Deferred tax 3 - 194 -
Cash and cash equivalents 1,106 1,582 1,425
------------ ------------ ---------
Total current assets 1,584 2,355 2,166
------------ ------------ ---------
TOTAL ASSETS 2,419 3,048 3,042
============ ============ =========
EQUITY AND LIABILITIES
Current liabilities
Trade and other payables 202 292 313
------------ ------------ ---------
Total current liabilities 202 292 313
------------ ------------ ---------
EQUITY
Equity attributable to
equity holders of the parent
Share capital 5 1,650 1,574 1,574
Other reserves 186 201 201
Retained earnings 381 981 954
------------ ------------ ---------
Total equity 2,217 2,756 2,729
------------ ------------ ---------
TOTAL EQUITY AND LIABILITIES 2,419 3,048 3,042
============ ============ =========
Sabien Technology Group Plc
Unaudited Condensed Group Cash Flow Statement for the period
ended 31 December 2014
6 months 6 months Year
to to to
31 December 31 December 30 June
2014 2013 2014
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
Loss before taxation (520) (245) (293)
Adjustments for:
Depreciation and amortisation 46 41 86
Loss on disposal of property,
plant & equipment - - 1
Finance income (6) (9) (16)
Transfers to equity reserves 1 1 1
Decrease in trade and other
receivables 386 627 482
(Increase)/decrease in inventories (123) 75 58
Decrease in trade and other
payables (111) (139) (118)
Cash (used in)/generated
from operations (327) 351 201
Net cash (outflow)/inflow
from operating activities (327) 351 201
------------- ------------- ---------
Cash flows from investing
activities
Proceeds from share issue
on warrant exercise 98 - -
Dividend paid (91) (79) (79)
Purchase of property, plant
and equipment and intangible
assets (5) (56) (70)
Finance income 6 9 16
Net cash inflow from/(used
in) investing activities 8 (126) (133)
Net (decrease)/increase in cash
and cash equivalents (319) 225 68
Cash and cash equivalents at
beginning of period 1,425 1,357 1,357
------------- ------------- ---------
Cash and cash equivalents at
end of period 1,106 1,582 1,425
------------- ------------- ---------
Sabien Technology Group Plc
Unaudited Condensed Group Statement of Changes in Equity as at
31 December 2014
Share Share Shares Share Retained Total
capital premium to be based earnings equity
issued payment
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at
1 July 2013 1,574 - 38 162 1,305 3,079
Dividend paid - - - - (79) (79)
Loss for the
period
1 July 2013
to 31 December
2013 - - - - (245) (245)
Employee share
option scheme
- value of
services provided - - - 1 - 1
Balance at
31 December
2013 1,574 - 38 163 981 2,756
Loss for the
period
1 January 2014
to 30 June
2014 - - - - (27) (27)
Employee share
option scheme
- value of
services provided - - - - - -
Balance at
30 June 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
Sabien Technology Group Plc
Notes to the Financial Statements for the period ended 31
December 2014
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 GBP'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 2014.
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 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
GBP146k which is 27% of total revenues for the period.
During the period, sales to the Group's largest customers were
as follows:
Sales revenue % of total
revenue
GBP'000
Customer 1 126 23%
Customer 2 74 14%
Customer 3 53 10%
3. Taxation
A deferred tax asset of GBP215k was recognised at 30 June 2014
in respect of GBP1,025k of available losses brought forward as the
Directors believe that the Group will be sufficiently profitable in
the future to be able to utilise these losses. The Directors do not
consider that any adjustment to this estimate is necessary in these
interim financial statements.
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 6 months Year to
to 31 December to 31 December 30 June
2014 2013 2014
GBP'000 GBP'000 GBP'000
Loss for the period (520) (245) (272)
Basic:
Weighted average number of
shares in issue 32,751,808 31,486,511 31,486,511
Loss per share - basic (1.6)p (0.8)p (0.9)p
Diluted:
Weighted average number of
shares 32,751,808 32,692,236 32,484,982
Loss per share - diluted (1.6)p (0.7)p (0.9)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 2014 GBP1,650,243 33,004,867
At 31 December 2013 and 30 June 2014 GBP1,574,326 31,486,511
6. Seasonality
The business of the Group is not seasonal
This information is provided by RNS
The company news service from the London Stock Exchange
END
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