TIDMSNT
RNS Number : 7234Z
Sabien Technology Group PLC
11 February 2014
11 February 2014
Sabien Technology Group Plc
("Sabien" or the "Group")
Unaudited Interim Results for the period to 31 December 2013
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 2013
(comparatives are shown for the same period in the previous year
unless otherwise stated):
Highlights in the period
-- Sales revenue GBP924k (2012/13 - GBP942k)
o While, similar to last year, a higher proportion of our sales
are again scheduled to be delivered during the second half of the
period, we are encouraged that this year we now have a number of
potentially significant clients, which reflects the way that our
sales pipeline is evolving.
-- Loss before tax GBP245k (2012/13 - GBP67k loss)
o Driven by investment in business development and in organic
R&D, the company recruited two new Business Development
Managers during the year and began investment in organic R&D.
Two experienced executives with sector specific experience and
track record were added to the team in July 2013. The team now
consists of four BDMs compared to two this time last year.
-- Maiden final dividend GBP79k paid in November
o The company introduced a progressive dividend policy paying a
maiden final dividend of 0.25p per share.
-- Cash at the end of the period was GBP1,582k (GBP1,357k at 30 June 2013)
-- GBP879k of sales orders achieved (2012/13 - GBP984k)
-- Tender award from Lincolnshire County Council for GBP2.2m over 3 years
o GBP700k of sales revenue for this contract is expected to be
recognised by financial year end.
-- New orders received for M2G including: Lincolnshire County
Council, Marriott Hotels, Welsh Government, Cofely, Fireye,
Greffen, Jones Lang LaSalle and Johnson Controls
-- Sales from indirect partners 80% of total sales (2012/13 - 88%)
-- Sales pipeline of GBP6.6m (GBP6.3m in October 2013's update)
-- GBP221k of orders received since 1 January 2014 giving total
orders received for the financial year to date of GBP1,100k
(2012/13 - GBP1,035k)
-- In addition, Sabien and/or its partners are working with a
number of clients that could lead to substantial orders in the
future.
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 delivering another period of new contract
wins for the business.
The Board anticipates delivering a full-year trading performance
in line with management expectations as the investment made in new
Business Development Managers in the first half begins to produce
returns along with existing sales pipeline opportunities
maturing.
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. The level of sales leads is at an
all-time high.
Historically our sales performance has shown a tendency to be
higher in first half year than in the second. However for this
financial year and, similar to last year, a higher proportion of
our sales are again scheduled to be delivered during the second
half of the year. This pattern shift reflects the way that our
sales pipeline is evolving.
We are also making excellent progress on all of the strategic
tests we set for the business back in 2013 including growing our
sales pipeline, driving sales growth, broadening our product suite,
growing our network of overseas distributors and maintaining or
exceeding our installation capacity in line with company forecasts.
We also aim to continue providing our clients and partners with a
world class project management service and experience.
Marketplace and Business Drivers
The market universe for commercial boilers in the UK is
estimated to be around 6m and, to date, Sabien has sold 7,500 M2G
units which indicates that the Group 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 ongoing relationships with its sub-contract installers.
The price of energy continues to rise ahead of inflation
focusing both public sector and private sector
organisations/enterprises on reducing consumption. The cost of
carbon also continues to rise which will act as an additional
driver.
Why Sabien and M2G?
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.
What will lead to increased M2G 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.
Since 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 and to help meet our market
expectations.
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 proceeding with research and development of a technology
that addresses energy efficiency in gas-fired water heaters. The
beta model is currently under test at a number of secure sites and
evaluation is likely to be completed later in 2014.
Finance
The Group's turnover in the period was GBP924k and there was a
loss before tax of GBP245k compared to a loss of GBP67k in the same
period last year. It is anticipated that sales revenue will be back
end loaded this year similar to the year ended 30 June 2013.
As at 31 December 2013, the Group's cash reserves amounted to
GBP1,582k compared to GBP1,357k at 30 June 2013 and GBP1,190k at 31
December 2012. The Group's target is to hold at least 6 month's
operating cash on current account and short term deposit.
Current Trading
Since the period ending 31 December 2013, GBP221k of orders have
been received giving total orders received for the year to date of
GBP1,100k which represents 45% of full year revenues of GBP2,471k
for 2012/13. Orders from indirect partners for the year to date
amount to GBP382k which represents 35% of total orders
received.
The sales pipeline currently stands at GBP6.6m. 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 GBP6.3m.
During the period under review, we have converted GBP879k of the
pipeline into firm orders while increasing its overall size. The
size of the sales pipeline is a key performance indicator as it
gives 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.
Outlook
The Board remains confident of meeting its management
expectations for this financial year. We believe that Sabien is now
in the best shape it has ever been with strong growth prospects for
M2G both in the UK and internationally.
We look forward to continuing our strategic development, our
excellent operating and financial performance, and delivering
further growth, thus increasing sustainable shareholder value.
Finally, the Board would like to take this opportunity to thank
our employees for their valuable contribution. The calibre of their
work is exceptional and will have a major impact in guiding the
Group in the second half of the year and beyond.
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 2013
Notes 6 months Year to
6 months to 31 December 30
to 31 December 2012 June
2013 2013
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Revenue 924 942 2,471
Cost of Sales (239) (317) (699)
Gross Profit 685 625 1,772
Administrative expenses (939) (702) (1,391)
Operating (Loss)/Profit (254) (77) 381
Investment revenues 9 10 20
(Loss)/Profit before tax (245) (67) 401
Corporation tax 3 - - (89)
---------------- ---------------- --------
(Loss)/Profit for the
period attributable to
equity holders of the
parent company (245) (67) 312
Other comprehensive income
for the period - - -
---------------- ---------------- --------
Total comprehensive income
for the period (245) (67) 312
================ ================ ========
(Loss)/Earnings per share
in pence - basic 4 (0.8)p (0.2)p 1.0p
(Loss)/Earnings per share
in pence - diluted 4 (0.7)p (0.2)p 0.9p
Sabien Technology Group Plc
Unaudited Condensed Group Statement of Financial Position as at
31 December 2013
Notes 31 December 31 December 30 June
2013 2012 2013
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
ASSETS
Non-current assets
Property, plant and equipment 115 69 76
Other intangible assets 578 626 602
------------ ------------ ---------
Total non-current assets 693 695 678
------------ ------------ ---------
Current assets
Inventories 125 195 200
Trade and other receivables 454 569 1,081
Deferred tax 3 194 283 194
Cash and cash equivalents 1,582 1,190 1,357
------------ ------------ ---------
Total current assets 2,355 2,237 2,832
------------ ------------ ---------
TOTAL ASSETS 3,048 2,932 3,510
============ ============ =========
EQUITY AND LIABILITIES
Current liabilities
Trade and other payables 292 240 431
------------ ------------ ---------
Total current liabilities 292 240 431
------------ ------------ ---------
EQUITY
Equity attributable to
equity holders of the parent
Share capital 5 1,574 1,574 1,574
Other reserves 201 192 200
Retained earnings 981 926 1,305
------------ ------------ ---------
Total equity 2,756 2,692 3,079
------------ ------------ ---------
TOTAL EQUITY AND LIABILITIES 3,048 2,932 3,510
============ ============ =========
Sabien Technology Group Plc
Unaudited Condensed Group Cash Flow Statement for the period
ended 31 December 2013
6 months 6 months Year
to to to
31 December 31 December 30 June
2013 2012 2013
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
(Loss)/Profit before taxation (245) (67) 401
Adjustments for:
Depreciation and amortisation 41 34 72
Finance income (9) (10) (20)
Transfers to equity reserves 1 16 24
Decrease/(increase) in trade
and other receivables 627 (335) (847)
Decrease in inventories 75 97 92
(Decrease)/increase in trade
and other payables (139) 84 275
Cash generated from/(used
in) operations 351 (181) (3)
Net cash inflow/(outflow)
from operating activities 351 (181) (3)
------------- ------------- ---------
Cash flows from investing
activities
Purchase of property, plant
and equipment and intangible
assets (56) (41) (62)
Finance income 9 10 20
Net cash used in investing
activities (47) (31) (42)
Cash flows from financing activities
Dividend paid (79) - -
Net cash used in financing activities (79) - -
Net increase/(decrease) in cash
and cash equivalents 225 (212) (45)
Cash and cash equivalents at
beginning of period 1,357 1,402 1,402
------------- ------------- ---------
Cash and cash equivalents at
end of period 1,582 1,190 1,357
------------- ------------- ---------
Sabien Technology Group Plc
Unaudited Condensed Group Statement of Changes in Equity as at
31 December 2013
Share Shares Share based Retained Total
capital to be payment earnings equity
issued reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 July
2012 1,574 38 138 993 2,743
Loss for the period
1 July 2012 to
31 December 2012 - - - (67) (67)
Employee share
option scheme
- value of services
provided - - 16 - 16
Balance at 31
December 2012 1,574 38 154 926 2,692
Profit for the
period
1 January 2013
to 30 June 2013 - - - 379 379
Employee share
option scheme
- value of services
provided - - 8 - 8
Balance at 30
June 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
Sabien Technology Group Plc
Notes to the Financial Statements for the period ended 31
December 2013
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 2013.
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
GBP69k which is 7% of total revenues for the period.
During the period, sales to the Group's largest customer was as
follows:
Sales revenue % of total
revenue
GBP'000
Customer 1 565 61%
3. Taxation
A deferred tax asset of GBP194k was recognised at 30 June 2013
in respect of GBP970k of available losses brought forward as the
Directors believe that the Group will continue to 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
2013 2012 2013
GBP'000 GBP'000 GBP'000
(Loss)/Profit for the period (245) (67) 312
Basic:
Weighted average number of
shares in issue 31,486,511 31,486,511 31,486,511
(Loss)/Earnings per share -
basic (0.8)p (0.2)p 1.0p
Diluted:
Weighted average number of
shares 32,726,357 32,650,400 32,650,400
(Loss)/Earnings per share -
diluted (0.7)p (0.2)p 0.9p
At the period end, warrants for 1,518,356 shares and 2,102,410
options over shares were in issue.
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 2013, 31 December 2012
and 30 June 2013 GBP1,574,326 31,486,511
6. Seasonality
The business of the Group is not seasonal and there are no
substantial and recurring variations between the results in the
first half-year period compared to the second half-year.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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