TIDMSNT
RNS Number : 8787N
Sabien Technology Group PLC
27 September 2019
For immediate release
27 September 2019
Sabien Technology Group plc
("Sabien" or the "Company")
Final Results
Audited Annual Report and Accounts for the year ended 30 June
2019
Sabien Technology Group plc, the manufacturer of M1G and M2G
boiler energy efficiency technologies has published its audited
report and accounts for the year ended 30 June 2019 ("Annual Report
and Accounts"). The Annual Report and Accounts have been posted to
shareholders and will be available from the Company's website at
http://www.sabien-tech.co.uk.
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) No 596/2014. The
person who arranged for the release of this announcement on behalf
of the Company was Richard Parris, Chairman and Director.
For further information:
Sabien Technology Group plc +44(0)20 7993 3700
Richard Parris, Chairman
Cédriane de Boucaud Truell
Beaumont Cornish Limited (Nominated Advisor) +44(0)20 7628 3396
Michael Cornish and Roland Cornish
www.beaumontcornish.com
Peterhouse Capital Limited (Broker) +44(0)20 7469 0930
Martin Lampshire and Fungai Ndoro
Extracts from the Annual Report and Accounts are set out
below:
Chairman & Chief Executive Officer's Report
We report on the results for Sabien Technology Group Plc
("Sabien", "the Company" or "the Group") for the year ended 30 June
2019.
Sabien Technology Group highlights 2019
-- Sales for the year GBP1.38m (2018: GBP0.59m)
-- Profit before tax GBP0.18m (2018: GBP0.85m loss)
-- Sales from Alliance Partners GBP0.36m (2018: GBP0.034m)
-- Overseas sales GBP0.131m (2018: GBP0.181m)
-- Fund raises of GBP0.70m (gross) to provide working capital
-- Net cash balance at 30 June 2019 was GBP0.74m (2018: GBP0.009m)
Highlights since the year end
-- Fund raise of GBP0.33m (gross)
-- Sales of GBP0.06m to 24 September 2019
-- Orders received but not yet invoiced to 24 September 2019 GBP0.04m
-- Net cash balance at 24 September 2019 of GBP0.95m.
Financial results
Revenue in the year was GBP1.38m (2018: GBP0.59m). The profit
before taxation was GBP0.18m (2018:
GBP0.85m loss).
At 30 June 2019, cash and cash deposits amounted to GBP0.74m
(2018: GBP0.009m).
Dividend policy
The directors propose no dividends (2018: nil) in the year.
Chairman's Statement
As announced on 3 September 2019 following the period end, I was
delighted to have been appointed Non-executive Chairman of the
Company. As I stated at the time, with the UK committing to a
carbon neutral economy by 2050, I believe that there is an
opportunity to create a next-generation technology platform,
pivoted around Sabien's core technology, that can exploit global
energy efficiency markets, especially in the US.
At the same time as my appointment, the Company also announced
the subscription of GBP326k from the Truell Intergenerational
Family Limited Partnership ("TIG"), which has put the Company in a
strong position for the next phase of growth. I will be undertaking
a thorough review of the Company's capabilities over the coming
weeks and working with Management and the Board to determine the
best strategy to increase shareholder value. This may or may not
lead to future acquisitions.
Since my appointment the Board has also welcomed two new
Non-executive Directors - Cédriane de Boucaud Truell and Marco
Nijhof. I consider that the appointments of Cédriane and Marco are
key to the next stage of Sabien's development as a public company.
They both bring significant operational, commercial and corporate
finance expertise to the Sabien Board and their assistance and
support are important to the Company's future prospects.
We are looking forward to building on the Company's success
during the financial year ended 30 June 2019 ("Period"), achieved
through a combination of the reduced cost base implemented during
the prior year, and the receipt of a significant sales order in
April from a major government department worth GBP755k in the year
(total contract GBP846k) for the deployment of Sabien's M2G Boiler
Optimisation Technology across parts of its estate. Sabien's
overseas distribution network and sales to local councils also
contributed to the Company's much improved financial performance in
the Period.
Sabien continues to work diligently to bring the near-term
pipeline into reported revenue and, with the support of our
strategic investor TIG, we look forward to updating shareholders in
due course on our development in the year ahead.
Richard Parris
Non-Executive Chairman
STRATEGIC REPORT
For the year ended 30 June 2019
1. Review of the Company's Business
The Group owns the rights to M1G and M2G, patented energy
efficiency products for installation on commercial boilers and
water heaters, both within and outside the UK. It subcontracts the
manufacture of both products to its principal supplier, which is
based in Northern Ireland, and installation in the UK to a number
of trained installation companies.
The Group has a strong reputation in the market place, being
recognised as the market leader in Boiler Optimisation
Controls.
Background
Historically and to gain a foothold in the UK market the company
offered paid pilots of its M2G boiler optimisation controller.
While the time-line from pilot to estate roll-out was typically
6-18 months, this method of technology acceptance and adoption
proved successful with clients resulting in the company being
awarded numerous multimillion-pound contracts.
To grow sales the decision was then taken by the Board and
Management to offer pilots for free and between 2015 and 2017
completed a total of 56 'free' major pilots in the UK and
Overseas.
Our key driver was to test whether offering free pilots would
help to remove uncertainty around sales order lumpiness and to help
mitigate the delays in mobilising M2G pilots and contract awards
brought about by long buying lead times and public tender
processes.
Offering 'free' pilots has now proven not to materially shorten
the sales cycle however we are in commercial discussions about
installing our technology with many clients who took part in our
free pilot offer and the management team is confident when
conditions are right these discussions will materialise into
sales.
The Company has introduced a Rental model option with a goal of
making the piloting and financing of M2G projects easier and risk
free for its clients. In addition, a Forensic Boiler Audit (FBA)
service has been implemented as an additional service line for the
Company. Both the Rental model and FBA have attracted interest but
so far uptake has been slower than hoped.
The FBA remains a good proposition for the future but the team
has been forced to focus on its M2G contracts in the year. The
rental model is offered to all sales prospects but the Company has
been successful in achieving capital sales instead during the year
which have supported working capital.
Market - Energy efficiency retrofit - Commercial Gas
Our clients are to be found in market sectors where the share of
energy costs in total production costs is low - such as in the
services sectors, public administrations, or in industries like
mechanical engineering and the food sectors.
There are three overriding factors influencing contract award
lead times, low gas price, availability of capital and the lack of
prevalence of Automated Maintenance Reporting (AMR) and/or sub-AMR
in the in-built UK building stock.
The lack of access to capital as a barrier to implementing
energy efficiency initiatives in our experience and in practice, is
more complex. For large companies the internal 'access to capital'
problem stems from neglect of energy efficiency within internal
capital budgeting procedures, combined with other organisational
rules such as strict requirements on payback periods.
For small and medium-sized companies, imperfect access to
capital prevents the implementation of profitable energy efficiency
projects. Energy efficiency investments tend to be classified as
discretionary maintenance projects, they are usually given a lower
priority over essential maintenance projects or strategic
investments.
This bias towards strict investment criteria can be worsened by
individual managers' incentives to favour large, strategic
projects, which are more prestigious than energy management
activities.
In addition, top management does not consider energy-cost
savings as a strategic priority. Thus, given the constraints on
time and attention it can be overlooked by top management.
Other sales channels
Outside the UK, the Group appoints "Tech Centres" which are
organisations involved in the supply of boiler systems and controls
to customers in their own territories. These Tech Centres are given
training in the installation of M2G as part of the appointment
process and purchase an agreed minimum number of M2Gs each
year.
The Group sells both directly and through a number of facilities
management and property management organisations. Sabien's sales
focus is organisations with multi-site estates within both the
public and private sectors.
Team
The Group employs its own project management and technical
engineering staff who are responsible for ensuring the smooth
roll-out and quality control of each M2G pilot and installation
project. Headcount currently stands at 10.
2. Principal risks and uncertainties facing the Group
The principal risks faced by the Group are:
-- Downward pressure on gas and oil prices
-- Technology developments and competitive products
-- Changes in legislation
-- Supply chain issues
-- Inability to meet customer demand
-- Non-recurring revenue model however this is now being addressed
-- Brand awareness and maintenance of reputation
-- Employee retention
-- Raising further finance
-- Trading solvently in the short/medium term
The Group places great importance on internal control and risk
management. A risk-aware and control-conscious environment is
promoted and encouraged throughout the Group. The Board, either
directly or through its committees, sets objectives, performance
targets and policies for management of key risks facing the
Group.
The risks outlined above are not an exhaustive list of those
faced by the Group and are not intended to be presented in any
order of priority. The Group holds weekly management meetings at
which, inter alia, business risks are reviewed and any areas that
are causing concern are discussed. A plan of action to resolve
issues is then put in place.
UK Energy Efficiency Barriers
Information, its provision and lack of trust, misaligned
financial incentives, and behaviour barriers mean energy efficiency
is undervalued. These barriers are often inter-related and work
together to reduce investment in energy efficiency.
The UK market is under developed thus has relatively
limited/mixed expertise and 'know-how' on the Client, vendor side
for energy efficiency investment.
Information
One of the key characteristics of an embryonic market is there
is a lack of access to trusted and appropriate information.
Energy efficiency improvements are typically made through
purchasing upgraded equipment, retro-fit technology and additives
however the biggest challenge facing the market is identifying the
absolute savings in energy and emissions which means that potential
buyers are not in a position to assess the benefits of an energy
efficiency proposal.
Financing
Energy efficiency projects can be undermined by the absence of
standardised monitoring and verification processes which means that
the benefits of energy efficiency investments are not trusted.
It can be difficult to relate back to individual activities to
identify opportunities to make energy efficiency improvements. In
the absence of clear, trusted information, many buyers do not
prioritise energy efficiency investments.
Misaligned financial incentives
It is not always the case that the person who is responsible for
making energy efficiency improvements will receive the benefits of
their actions.
Commercial rented tenants are responsible for their own bills
and therefore it is in their interest to reduce the bills, but
contractual arrangements around landlord/tenants or facilities
management may inhibit investment.
Therefore, energy efficiency investments are not prioritised as
they might otherwise be. Energy costs can be a relatively small
proportion of costs for many sectors, but in aggregate that energy
use is a huge ask of our energy system.
Undervaluing energy efficiency
The lack of salience of energy efficiency increases the impact
of hassle costs and behavioural barriers. Energy efficiency changes
may involve significant hassle costs for those carrying out the
investment, which increases the costs of the investment e.g.
disruption caused by building works or disruption to production
lines.
Energy efficiency improvements may not be seen as strategic for
a company and therefore not prioritised.
Outside of the energy intensive industry sectors, energy bills
are only a small proportion of business costs. If the relative gain
is small, then the hassle costs can act as a significant barrier,
especially if there is uncertainty around the benefits of the
investment. While hassle costs are not a market failure, they
compound the impact of other behavioural barriers, reducing
investment in energy efficiency. This is often why companies are
reluctant to invest in energy efficiency, seeking short payback
times, even if a project is cost-effective and meets SPB criteria.
Wider economic uncertainty is also reducing willingness to
invest.
3. Performance of the business in the financial year
-- Business Development - UK
The Group achieved a significant improvement in sales in the
year GBP1.38m (2018: GBP0.59m). Whilst there has been no change in
Sabien's robust sales process, given the unpredictable nature of
the sales pipeline, the Group has moved away from considering sales
pipeline conversion as a key metric and instead monitors sales
achieved.
Alliance partners contributed GBP0.36m of sales representing
26.1% of the total for the year. The volume of sales from alliance
partners will vary from year to year and is dependent on the stage
at which each partner is at in the sales cycle with its own clients
and pipeline.
-- Business Development - Overseas
The Group sells M2G internationally through its network of
"Sabien Tech Centres". A "Sabien Tech Centre" is a company outside
the UK with:
o An established distribution network and an existing client
base in the commercial and industrial heating sector
o Engineering capability and capacity
o Competence in commercial boilers and currently offering energy
efficiency solutions as part of their product and service suite
The channel will require a level of M2G operational support in
knowledge transfer/sharing and product training.
During the course of the financial year, overseas sales
represented 9.5% of total sales at GBP0.131m (2018 - GBP0.18m). In
2013, the Group appointed Fireye, Inc. as a non-exclusive
distributor in the USA as well as other overseas territories.
Through this relationship with Fireye and with other parties, we
have appointed Tech Centres in a number of territories throughout
the world.
We remain confident this relationship will in time bring
material value to the Group in the future. For further information
on Fireye NXM2G, please visit www.flamecontrols.com.
-- UK M2G Pilots
The Group will offer pilots but only on a paid basis and only to
customers with large estates.
-- M1G
The Group launched its M1G, a product for use on hot water
heaters in 2014. The M1G is designed to prevent the inherent
problem of short cycling within direct hot water generators
resulting in unnecessary fuel consumption during low load demands.
Short cycling is caused when the hot water generator's minimum
firing capacity exceeds the current system loss, causing the hot
water generator to fire for very short periods. M1G is sold to
customers as an adjunct to M2G sales.
-- Key Performance Indicators ("KPIs")
The Group has identified a number of key performance indicators
which are regularly monitored to ensure that business is on track
or to give warning where problems may be arising:
Financial: The management's focus is on the development of
sales, the maintenance of a healthy gross margin and prudent cost
control. The two main performance indicators are unit sales and
maintenance of a healthy gross profit margin. During the year, the
Company sold 823 units (2018: 385 units) and the gross profit
margin was 85.5% (2018: 82.6%). The margin has increased
predominantly due to reduced reliance on subcontractors for
installations and introduction of high margin revenue streams such
as the M2G rental option. In addition, overheads have continued to
reduce from last year.
Reputation: The Group's reputation for project management and
delivery of its product's benefits on time and within budget is key
to its continuing business success. Management is always looking at
improving the quality of the Group's performance and will continue
to invest in products and solutions to enable it to maintain and
enhance its reputation.
Personnel: In the short-term the Group is not looking to
recruit.
4. Strategy
Subject to a near term review of the Company's market and
capabilities, the Company intends to invest for growth in the
following areas:
-- Utilise its existing research and development pipeline to make existing hardware (M2G, M1G) Internet-of-Things ("IoT") capable and enable substantial data capturing, storage, and analysis for the Sabien technologies.
-- Migrate new product design into the IoT and Cloud-enabled
subscription services with the potential to assess third party
licensing.
-- Enter the key US market through Original Equipment Manufacturer (OEM) relationships.
-- Maintain a network of overseas distribution partners to
deliver material revenue for the Group.
-- Maintain or exceed an installation capacity in line with
company forecasts and to continue providing our clients and
partners with a world class project management service and
experience.
-- Maintaining brand awareness and reputation of the Group.
This report was approved and authorised for issue by the Board
on 26 September 2019 and signed on its behalf by:
Alan O'Brien
Chief Executive Officer 26 September 2019
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2019
2019 2018
Notes GBP'000 GBP'000
Revenue 1,379 588
Cost of sales (200) (102)
Gross profit 1,179 486
Administrative expenses (996) (1,331)
Operating profit/(loss) 5 183 (845)
Finance expenses (1) -
Profit/(loss) before tax 182 (845)
Tax credit 8 - -
Profit/(loss) for the year
attributable to equity holders
of the parent company 182 (845)
Other comprehensive income - -
Total comprehensive income
for the year 182 (845)
Earnings/(loss) per share in
pence - basic 9 0.04 (0.65)
Earnings/(loss) per share in
pence - diluted 9 0.04 (0.65)
The earnings per share calculation relates to both continuing
and total operations.
Consolidated and Company Statements of Financial Position
As at 30 June 2019 Company Reg No: 05568060
Group Company
2019 2018 2019 2018
Notes GBP'000 GBP'000 GBP'000 GBP'000
ASSETS
Non-current assets
Property, plant and equipment 10 20 37 - -
Intangible assets 11 151 198 - -
Investment in subsidiaries 12 - - - -
Total non-current assets 171 235 - -
Current assets
Inventories 13 55 79 - -
Trade and other receivables 14 117 110 54 198
Cash and bank balances 15 738 9 717 8
Total current assets 910 198 771 206
TOTAL ASSETS 1,081 433 771 206
EQUITY AND LIABILITIES
Current liabilities
Trade and other payables 16 136 319 27 92
Total current liabilities 136 319 27 92
EQUITY
Equity attributable to equity
holders of the parent
Share capital 17 3,001 2,931 3,001 2,931
Other reserves 1,601 1,026 1,601 1,026
Retained earnings (3,657) (3,843) (3,858) (3,843)
Total equity 945 114 744 114
TOTAL EQUITY AND LIABILITIES 1,081 433 771 206
As permitted by section 408 of the Companies Act 2006, the
Income Statement of the Parent Company is not presented as part of
these financial statements. The loss dealt with in the accounts of
the Parent Company is GBP19k (2018: GBP3,949k loss). There is no
other comprehensive income in the Parent Company.
The financial statements were approved and authorised for issue
by the Board on 26 September 2019 and were signed on its behalf
by:
Alan O'Brien
Chief Executive Officer
26 September 2019
Consolidated and Company Cash Flow Statements
For the year ended 30 June 2019
Group Company
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Profit/(loss) before taxation 182 (845) (19) (3,949)
Adjustments for:
Depreciation and amortisation 68 90 - -
Impairment of intangibles - 169 - -
Impairment of investment in subsidiary - - - 3,774
Transfers to equity reserves - 1 - 1
Finance expense 1 - - -
(Increase) / Decrease in trade
and other receivables (7) (28) 144 (130)
Decrease in inventories 24 54 - -
(Decrease) / Increase in trade
and other payables (153) 133 (65) 71
Cash generated from / (used in)
operations 115 (426) 60 (233)
Corporation taxes recovered - - - -
Net cash inflow / (outflow) from
operating activities 115 (426) 60 (233)
Cash flows from investing activities
Net proceeds from share issues 649 400 649 400
Investment in subsidiary - - - (173)
Purchase of property, plant and
equipment (4) (21) - -
Proceeds on disposal of property - - - -
plant and equipment
Finance costs (1) - - -
Net cash generated by investing
activities 644 379 649 227
Net increase / (decrease) in cash
and cash equivalents 759 (47) 709 (6)
Cash and cash equivalents at the
beginning of the year (21) 26 8 14
Cash and cash equivalents at the
end of
the year 738 (21) 717 8
Cash and cash equivalents comprise:
Cash and cash equivalents 738 9 717 8
Invoice financing (included in
other payables) - (30) - -
738 (21) 717 8
The prior year impairment of the carrying value of the
investment in subsidiary, as detailed in note 12, is a significant
non-cash transaction.
Consolidated Statement of Changes in Equity
For the year ended 30 June 2019
Share capital Share premium Share based Retained Total equity
payment earnings
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 July
2017 2,531 981 99 (3,053) 558
Changes in equity
for year
Loss for the year - - - (845) (845)
Share issues 400 - - - 400
Employee share option
scheme - value of
services provided - - 1 - 1
Transfer to retained
earnings re lapsed
options - - (55) 55 -
Balance at 30 June
2018 2,931 981 45 (3,843) 114
Changes in equity
for year
Profit for the year - - - 182 182
Share issues 70 630 - - 700
Share issue costs - (51) - - (51)
Transfer to retained
earnings re lapsed
options - - (4) 4 -
Balance at 30 June
2019 3,001 1,560 41 (3,657) 945
The notes on pages 33 to 52 form part of these financial
statements.
Company Statement of Changes in Equity
For the year ended 30 June 2019
Share capital Share premium Share based Retained Total
payment earnings equity
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 July
2017 2,531 981 99 51 3,662
Changes in equity
for year
Loss for the year - - - (3,949) (3,949)
Share issue 400 - - - 400
Employee share option
scheme - value of
services provided - - 1 - 1
Transfer to retained
earnings re lapsed
options - - (55) 55 -
Balance at 30 June
2018 2,931 981 45 (3,843) 114
Changes in equity
for year
Loss for the year - - - (19) (19)
Share issue 70 630 - - 700
Share issue costs - (51) - - (51)
Transfer to retained
earnings re lapsed
options - - (4) 4 -
Balance at 30 June
2019 3,001 1,560 41 (3,858) 744
The notes on pages 33 to 52 form part of these financial
statements.
Notes to the Consolidated Financial Statements
For the year ended 30 June 2019
General information
The Company is incorporated in England & Wales under the
Companies Act 2006. The address of the registered office is given
on page 1.
The nature of the Group's operations and principal activities
are set out in the Directors' Report.
1. Accounting policies
The following significant principal accounting policies have
been used consistently in the preparation of the consolidated
financial information. 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, despite the uncertainty as to the
timing of future profitability, the Group's return to profitability
indicates that the Group is a going concern and have accordingly
prepared these financial statements on a going concern basis.
The key performance indicator for the Group is M2G unit sales
which showed a significant increase in the year to 823 units (2018:
385). Based on a prudent level of sales in line with the 2018
financial year therefore not relying on another major contract, and
after taking into account the capital raise in September 2019 of
GBP326k (gross), cashflow forecasts prepared by the Directors
confirm that the Group will have sufficient working capital to
settle its liabilities as they fall due for a period of not less
than 12 months from the date of the approval of these financial
statements.
The 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) 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 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 Acquisitions and
Mergers which was in place at the time of the transaction 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 which, as with IFRS 3, are
outside the scope of that accounting standard. 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 Statement of Financial Position and
other financial information have been presented as though the
assets and liabilities of the combining entities had been
transferred at 1 October 2005.
Whilst FRS 6 is no longer effective similar requirements are set
out in the current UK Financial Reporting Standard, FRS 102, in
respect of such transactions.
The Group did take 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. When consolidated retained
earnings are available, any debit reserves are offset against these
retained earnings. As there were consolidated retained earnings
available in the year ended 30 June 2012, the merger reserve was
offset against those retained earnings.
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; and
-- 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) Deferred consideration: Deferred consideration is discounted
from the anticipated settlement date at the Group's weighted
average cost of capital.
g) Inventories: Inventories are valued at the lower of average
cost and net realisable value.
h) Financial instruments
Financial Assets:
IFRS 9 Financial Instruments took effect from 1 July 2018 and
has been adopted for the year ended 30 June 2019 using the full
retrospective method. The Group has reassessed the classification
and measurement of financial instruments and this has not given
rise to any changes except that financial assets previously
classified as "loans and receivables" under IAS 39 are now
presented as "financial assets at amortised cost" in the financial
statements.
The Group classifies its financial assets as financial assets at
amortised cost 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.
Financial assets amortised cost 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 financial assets at
amortised cost 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.
A loss allowance is recognised on initial recognition of
financial assets held at amortised cost, based on expected credit
losses, and is re-measured annually with changes appearing in
profit or loss. Where there has been a significant increase in
credit risk of the financial instrument since initial recognition,
the loss allowance is measured based on lifetime expected losses.
In all other cases, the loss allowance is measured based on
12-month expected losses. For assets with a maturity of 12 months
or less, including trade receivables, the 12-month expected loss
allowance is equal to the lifetime expected loss allowance.
Short term financial assets are measured at transaction price,
less any impairment. Loans receivable are measured at transaction
price net of transaction costs and measured subsequently at
amortised cost using the effective interest method, less any
impairment.
The Group's financial assets are disclosed in notes 13 and 14.
Impairment testing of trade receivables is described in note
14.
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 greater than 12 months
after the year end date and are described in note 16.
i) 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.
j) Revenue recognition
Revenue is measured based on the consideration to which the
Group expects to be entitled in a contract with a customer and
excludes amounts collected on behalf of third parties. The Group
recognises revenue when it transfers control of a product or
service to a customer.
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. However, in this latter case, where the Group
is responsible for the project management of the installations,
revenue is recognised upon installation at the customer site. 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 from operating lease services rendered to customers is
recognised on a straight-line basis.
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.
k) 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.
l) Operating leases (Group as lessee)
Rentals applicable to operating leases where substantially all
of the benefits and risks of ownership remain with the lessor are
charged to profit and loss on the straight-line basis over the
lease term.
m) Operating leases (Group as lessor)
Assets leased to customers under operating leases are included
in property, plant and equipment and are depreciated over their
lease term down to their anticipated realisable value on a
straight-line basis. Anticipated realisable values are regularly
reassessed and the impact upon the depreciation charge is adjusted
prospectively.
n) Taxation
The charge for current tax is based on the results for the year
as adjusted for items that are non-assessable or disallowed. It is
calculated using rates that have been enacted or substantively
enacted by the year end 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.
o) Adoption of new and revised standards
These financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by
the European Union.
New standards impacting the Company that have been adopted in
the annual financial statements for the year ended 30 June 2019,
and which have given rise to changes in the Group's accounting
policies are:
IFRS 9 Financial Instruments (IFRS 9); and
IFRS 15 Revenue from Contracts with Customers (IFRS 15)
IFRS 9 took effect from 1 July 2018 and has been adopted for the
year ended 30 June 2019 using the full retrospective method. No new
credit losses are expected to materialise as a result of this
transition. The adoption of IFRS 9 has not given rise to any
changes to financial statements.
IFRS 15 replaced IAS 18 'Revenue', IAS 11 'Construction
Contracts', and several revenue-related Interpretations. The new
Standard has been applied retrospectively. Management has reviewed
its revenue recognition policies prior to adoption of the new
Standard and have concluded previous policies fall in line with
IFRS 15. As such there has been no impact on the financial
statements and the prior period has not been restated.
Other new and amended standards and Interpretations issued by
the IASB that will apply for the first time in the next annual
financial statements are not expected to impact the Company as they
are either not relevant to the Company's activities or require
accounting which is consistent with the Company' current accounting
policies.
p) New and revised standards not yet effective
The following IFRS and IFRIC Interpretations have been issued
but have not been applied by the Group in preparing these financial
statements as they are not as yet effective and in some cases had
not yet been adopted by the EU. The Group intends to adopt these
Standards and Interpretations when they become effective, rather
than adopt them early.
-- IFRS 16 'Leases'
-- IFRS 10 and IAS 28 (amendments), 'Sale or Contribution of
Assets between an Investor and its Associate or Joint Venture'
-- Amendments to IFRS 2, 'Classification and Measurement of Share-based Payment Transactions'
-- Amendments to IAS 7, 'Disclosure Initiative'
-- Amendments to IAS 12, 'Recognition of Deferred Tax Assets for Unrealised Losses'
IFRS 16 is a significant change to lease accounting and all
leases will require balance sheet recognition of a liability and a
right-of-use asset except short term leases and leases of low value
assets. The Group is unlikely to enter into any significant
operating lease agreements in the near future and is not subject to
any agreements on the date of these financial statements, as such,
there will be no effect on the financial statements as a result of
this standard.
A number of IFRS and IFRIC interpretations are also currently in
issue which are not relevant for the Group's activities and which
have not therefore been adopted in preparing these financial
statements.
2. Financial risk management
Financial Risk Factors
The Group's activities expose it to a variety of financial risks
arising from its use of financial instruments: credit risk,
liquidity risk and market risk. This note describes the Group's
objectives, policies and processes for managing those risks and the
methods used to measure them.
Further quantitative information in respect of these risks is
presented throughout these financial statements. So far, there have
been no substantive changes in the Group's exposure to financial
instrument risks, its objectives, policies and processes for
managing those risks or the methods used to measure them from
previous periods unless otherwise stated in this note.
The principal financial instruments used by the Group, from
which the financial instrument risk arises, are as follows:
-- trade and other receivables
-- cash and cash equivalents
-- trade and other payables
The Board has overall responsibility for the determination of
the Group's risk management objectives and policies and, whilst
retaining ultimate responsibility for them, it has delegated the
authority for designing and operating processes that ensure the
effective implementation of the objectives and policies to the
Group's finance function. The Board reviews regular finance reports
from the Finance Director through which it evaluates any risk
exposures with a view to minimising any potential adverse effects
on the Group's financial performance. So far, the Group has not
used derivative financial instruments to hedge risk exposures as
its activities and operations exposure to such risks are not deemed
significant. Transactions that are speculative in nature are
expressly forbidden.
Details regarding the policies that address financial risk are
set out below:
(i) Credit Risk
Credit risk arises principally from the Group's trade
receivables and cash and cash equivalents. It is the risk that the
counterparty fails to discharge its obligation in respect of the
instruments.
Trade Receivables
The nature of the Group's operations means that all of its
current key customers are established businesses and organisations
in both the public and private sector. The credit risks are
minimised due to the nature of these customers and the
concentration of sales to date within established economies. The
Group will continually review its credit risk policy, taking
particular account of future exposure to developing markets and
associated changes in the credit risk profile.
The carrying amount in the Consolidated Statement of Financial
Position, net of any applicable provisions for loss, represents the
amount exposed to credit risk and hence there is no difference
between the carrying amount and the maximum credit risk
exposure.
(ii) Liquidity Risk
Liquidity risk arises from the Group's management of working
capital. It is the risk that the Group will encounter difficulty in
meeting its financial obligations as they fall due.
The Group's policy is to ensure that it will always have
sufficient cash to allow it to meet its liabilities when they
become due and have the availability of such funds for its
operations. Management monitors rolling forecasts of the Group's
liquidity reserve which comprises cash and cash equivalents on the
basis of expected cash flow. At the year end date, these
projections indicate that the Group expects to have sufficient
liquid resources to meet its obligations under all reasonable
expected circumstances for the forthcoming year. The Group
continues to monitor its liquidity position through budgetary
procedures and cash flow analysis.
The table below analyses the Group's financial liabilities into
relevant maturity groupings based on the remaining period from the
year end date to the contractual maturity date. The amounts
disclosed in the table are the contractual undiscounted cash flows.
Balances due in less than 1 year equal their carrying balances as
the impact of discounting is not significant.
Less than Between 1 Between 2 Over 5
1 year and 2 years and 5 years years
At 30 June 2019 GBP'000 GBP'000 GBP'000 GBP'000
Trade and other
payables 136 - - -
At 30 June 2018
Trade and other
payables 319 - - -
The Group does not have any derivative financial
instruments.
(iii) Market Risk
Market risk arises from the Group's use of interest bearing,
tradable and foreign currency financial instruments. There is the
risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in interest rates
(interest rate risk), foreign exchange rates (currency risk) or
other market factors (other price risk).
-- Interest Rate Risk
The Group invests its surplus cash in a spread of fixed rate
short term bank deposits to minimise risk and maximise flexibility.
In doing so it limits its exposure to fluctuations in interest
rates that are inherent in such a market. Overall risk is not
regarded as significant and the effect of a one percentage point
increase in the average interest rate during the year would have
resulted in a decrease in post- tax profit for the year of GBP1k
(2018: GBP1k).
-- Currency Risk
The Group operates internationally through its distributorship
arrangements in Europe and the US and is exposed to currency risk
arising from the Euro and the US dollar. Currency risk arises from
future commercial transactions and recognised assets and
liabilities. Given the current scale of the Group's overseas
operations, overall currency risk is considered to be low.
An increase of one percentage point in the average 2019 Euro and
US dollar exchange rates would have decreased the Group's profit
after tax by less than GBP1k (2018: GBP1k).
-- Other Price Risk
The Group does not hold external investments in equity
securities and therefore is not exposed to other price risk.
Capital risk management
The Group's objective when managing capital is to safeguard the
Group's ability to continue as a going concern in order to provide
future returns for shareholders and benefits for other stakeholders
and to maintain an optimal capital structure to reduce the cost of
capital. The Group seeks to maintain, at this stage of its
development, sufficient funding drawn primarily from equity to
enable the Group to meet its working and strategic needs. The Group
may issue new shares or realise value from its existing investments
and other assets as may be deemed necessary.
The Group centrally manages borrowings, investment of surplus
funds and financial risks. The objective of holding financial
investments is to provide efficient cash and tax management and
effective funding for the Group.
Fair value estimation
Holding trade receivables and payables at book value less
impairment provision is deemed to approximate their fair values.
The fair value of financial liabilities for disclosure purposes is
estimated by discounting the future contractual cash flows at the
current market interest rate that is available to the Group for
similar financial instruments.
3. Critical accounting estimates and judgements
Sources of Estimation Uncertainty
The preparation of the consolidated and company financial
statements requires the Group and Company to make estimates,
judgements and assumptions that affect the reported amounts of
assets, liabilities, revenues and expenses and related disclosure
of contingent assets and liabilities. The directors base their
estimates on historical experience and various other assumptions
that they believe are reasonable under the circumstances, the
results of which form the basis for making judgements about the
carrying value of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.
In the process of applying the Group's and Company's accounting
policies, management has made a number of judgements and
estimations, of which the following are deemed to have the most
significant effect on amounts recognised in the financial
statements:
(i) Revenue Recognition
No significant criteria are required by the Group in regard to
revenue recognition that are not covered by the accounting
policy.
(ii) Share-based Payments
The calculation of the estimated fair value of share options and
warrants granted can only reasonably be assessed once such options
and warrants are exercised. To date, no options or warrants have
been exercised and the Group is therefore reliant upon the
calculations as explained in the accounting policy and note 20 to
the accounts in arriving at an estimated fair value in line with
the requirements of IFRS2.
(iii) Going Concern
The key performance indicator for the Group is M2G unit sales
which showed a significant increase in the year to 823 units (2018:
385).
Following the increase in sales revenue the Group generated a
profit for the year of
GBP182k and at the year end had cash reserves of GBP738k.
Despite the improved financial performance of the Group, there
remains uncertainty of future profitability. The directors are
taking steps to address this uncertainty and which they expect will
ultimately maintain the Group's profitability as set out below.
The Group continues to have substantive discussions with a
number of parties who have received the P35 and P40 pilot reports.
The Board considers that a number of these discussions will result
in significant sales revenue.
In addition, the Board is putting in place a new strategy to
make the existing hardware internet of things (IoT) compatible,
develop IoT and Cloud based subscription services, and develop the
US market.
The Group announced that its broker, Peterhouse Capital Limited,
had raised gross proceeds of GBP400k on 14 December 2018 and
GBP300k on 13 May 2019 via the placing of 700,000,000 new ordinary
shares with new and existing investors, at a price of 0.1 pence per
placing share. On 3 September 2019 the Group announced a
subscription of 296,751,623 new ordinary shares at a price of 0.11
pence per subscription share raising GBP326k (gross).
The cashflow forecasts based on the above prepared by the
Directors confirm that the Group will have sufficient working
capital to settle its liabilities as they fall due for a period of
not less than 12 months from the date of the approval of these
financial statements. Consequently, the financial statements have
been prepared on a going concern basis.
(iv) Impairment of Assets
Based on their best estimate of likely future developments
within the business, the directors consider that the impairment
provision against the carrying value of Investment in Subsidiaries
in the Company's Statement of Financial Position as at the year end
date remains valid and reasonable, as detailed in note 12.
(v) Deferred Tax Assets
Management judgement is required to determine the amount of
deferred tax asset that can be recognised, based upon the likely
timing and level of future taxable profits together with an
assessment of the effect of future tax planning strategies. In
2015, the Directors decided that it would be prudent not to
recognise any deferred tax asset in the financial statements until
recurring profitability is attained.
Despite the profit for the year which is primarily due to the
conversion of one significant lead, and the likelihood of the
Company not remaining profitable in the current financial year, no
deferred tax asset will be recognised in the financial statements
for the year under review.
The tax losses available to offset against future taxable
profits, subject to HMRC agreement, are estimated at GBP5.6m.
(vi) Intellectual Property
As a result of a review by the Directors of the unit sales
likely to arise over the next year, no change in the value of
Intellectual Property has been deemed to be necessary and
consequently no provision has been made for impairment.
4. 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 Group'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
10% of the total and are analysed as follows:
Geographical information Year ended 30 Year ended
June 2019 30
June 2018
% of total % of total
Sales revenue revenue Sales revenue revenue
GBP'000 GBP'000
UK 1,247 90 406 69
Other 132 10 182 31
Total 1,379 100 588 100
During the period, sales to the group's largest customers were
as follows:
Sales revenue % of total
revenue
GBP'000
Customer 1 755 55
Customer 2 153 11
No other single customer represented more than 10% of the sales
revenue for the year.
5. Operating profit/(loss)
Operating profit/(loss) is stated after
charging/(crediting):
Year ended 30 Year ended
June 2019 30 June 2018
GBP'000 GBP'000
Depreciation of property, plant & equipment 21 43
Impairment of intangible assets - 169
Amortisation of intangible assets 47 47
Operating lease rentals - land and buildings - 62
Cost of inventories recognised as an
expense 69 54
The impairment of intangible assets is further detailed in note
11 of the financial statements.
The amortisation and impairment (in the prior year) of
intangible assets is included within administrative expenses.
6. Auditors' remuneration
Year ended Year ended
30 June 2019 30
June 2018
GBP'000 GBP'000
Fees payable to the Company's auditors
for:
- the audit of the Company's annual
accounts 10 10
Fees payable to the Company's auditors
for other services to the Group:
- the audit of the Company's subsidiary 18 15
Total audit fees 28 25
Fees payable to the Company's auditors
for:
- taxation compliance services - -
- other services 6 6
Total other fees 6 6
7. Staff costs
Year ended 30 June Year ended
2019 30
June 2018
GBP'000 GBP'000
Wages and salaries 525 545
Social security costs 63 69
588 614
The average monthly number of employees, including directors,
during the year was as follows:
Year ended 30 June Year ended
2019 30
June 2018
Nos. Nos.
Directors 3 4
Administration 7 8
10 12
Key management personnel are detailed in note 21 and their
remuneration is analysed in the Remuneration Report.
8. Corporation tax
Year ended Year ended
30 30 June 2018
June 2019
GBP'000 GBP'000
Current tax - -
Total tax credit for the year - -
Profit/(loss) before tax 182 (845)
Tax on profit/(loss) on ordinary activities
at standard UK corporation tax rate
of 19% (2018: 19%) 35 (161)
Expenses not deductible for tax purposes 4 4
Depreciation in excess of capital allowances 4 4
Utilised tax losses (43) -
Tax losses carried forward - 153
Current tax - -
Deferred tax:
As detailed in note 3 (v), in 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.
The aggregate amount of deductible temporary differences, parent
company unused tax losses and unused tax credits for which no
deferred tax asset is recognised in the Consolidated Statement of
Financial Position is estimated at GBP5.6m (2018: GBP5.9m) which at
the current tax rate would equate to GBP1.06m (2018: GBP1.1m).
9. Earnings per share
The calculation of earnings per share is based on the profit for
the year attributable to equity holders of GBP182k (2018: GBP845k
loss) and a weighted average number of shares in issue during the
period of 473,588,200 (2018: 130,254,867). At the year end, options
over 316,371 shares (2018: 422,437) were in issue, but have not
been taken into account in calculating diluted earnings per share
as they are anti-dilutive.
10. Property, plant and equipment
Group 2019 2018
GBP'000 GBP'000
Cost
At 1 July 310 289
Additions 4 21
Disposals (166) -
At 30 June 148 310
Depreciation
At 1 July 273 230
Charge for the year 21 43
Reversed on disposals (166) -
At 30 June 128 273
Net Book Value
At 30 June 2019 20 37
At 30 June 2018 37 59
The Company held no property, plant and equipment at 30 June
2019 and 2018.
11. Intangible assets
Group 2019 2018
GBP'000 GBP'000
Intellectual Property
Cost
At 1 July and 30 June 943 943
Amortisation
At 1 July 745 529
Charge for the year 47 47
Impairment - 169
At 30 June 792 745
Net Book Value
At 30 June 2019 151 198
At 30 June 2018 198 414
Intellectual Property represents the rights to the M2G product
acquired from the inventors. As a result of an impairment review
performed in accordance with IAS 36 'Impairment of Assets' as
detailed in note 12, an impairment of GBP0.169m was identified in
the prior year relating to the intellectual property.
The remaining amortisation period for Intellectual Property is 4
years. The Company held no intangible assets at 30 June 2019 and
2018.
12. Investment in subsidiaries
Company 2019 2018
GBP'000 GBP'000
Cost
At 1 July 6,297 6,124
Additions - 173
At 30 June 6,297 6,297
Impairment provision
At 1 July 6,297 2,523
Charge for year - 3,774
At 30 June 6,297 6,297
Net Book Value
At 30 June 2019 - -
At 30 June 2018 - 3,601
Details of the subsidiary undertakings at the year end date are
as follows:
Name of company Country of Class of Nature of business Proportion
incorporation share of voting
rights
Sabien Technology England & Managing carbon through
Limited Wales Ordinary energy reduction 100%
Sabien
Technology Ownership of
IP Limited Northern Ireland Ordinary Intellectual Property 100%
The Company performs an annual impairment review in accordance
with IAS 36 'Impairment of Assets'. In accordance with IAS 36, the
recoverable amount is calculated being the higher of value in use
and fair value less costs to sell.
The value in use is determined using cash flow projections
covering a ten year period which have been approved by the Board.
They reflect the directors' expectations of the level and timing of
revenue and expenses, working capital and operating cash flows
based on past experience and future expectations of business
performance.
The pre-tax discount rate of 9.6% applied to the cash flow
projections is derived from the Group's weighted average cost of
capital. An average growth rate of 8% (rental revenue growth rate
8%) has been applied over the ten years of the cash flow forecast.
In the prior year the impairment review indicated that the
investment should be fully impaired resulting in an impairment
charge of GBP3.774m.
13. Inventories
Group 2019 2018
GBP'000 GBP'000
Goods held for resale 55 79
The Company held no inventories at 30 June 2019
and 2018.
14. Trade and other receivables
2019 2018 2019 2018
Group Group Company Company
GBP'000 GBP'000 GBP'000 GBP'000
Trade receivables 77 54 - -
Other receivables 40 56 13 11
Amounts owed by group undertakings - - 41 187
117 110 54 198
The value of trade receivables quoted in the table above also
represents the fair value of these items and are due within one
year.
Amounts due from group undertakings is covered by a GBP250,000
loan facility (2018: included GBP250,000) advanced to Sabien
Technology Limited. The loan facility is secured by way of a
debenture over the assets of Sabien Technology Limited. The loan
facility is interest free and repayable on demand.
Trade receivables are considered impaired if they are not
considered recoverable. As at 30 June 2019, the Group had no
receivables which were considered to be impaired and against which
a full provision has been made. Trade receivables of GBPnil (2018:
GBPnil) were past due but not impaired. The ageing analysis of
these trade receivables is as follows:
2019 2018
GBP'000 GBP'000
Up to 3 months 77 54
3 to 6 months - -
More than 6 months - -
77 54
The carrying amounts of the Group's trade and other receivables
are denominated in the following currencies:
2019 2018
GBP'000 GBP'000
Pounds sterling 116 110
Euros 1 -
117 110
15. Cash and bank balances
2019 2018 2019 2018
Group Group Company Company
GBP'000 GBP'000 GBP'000 GBP'000
Cash and bank balances 738 9 717 8
16. Trade and other payables
2019 2018 2019 2018
Group Group Company Company
GBP'000 GBP'000 GBP'000 GBP'000
Trade payables 21 145 4 70
Social security and other
taxation 4 34 (14) (8)
Accruals and deferred income 111 109 37 30
Other payables - 31 - -
136 319 27 92
In the prior year, Sabien Technology Limited entered into an
invoice financing agreement. The loan is secured by way of a
debenture over the assets of the Company, attracts interest at a
variable rate and is repayable on demand.
17. Share capital
2019 2018
GBP'000 GBP'000
Allotted, called up and fully paid
890,254,867 Ordinary shares of 0.01p each
(2018: 190,254,867 Ordinary shares of 0.5p) 89 951
44,004,867 Deferred shares of 4.5p each
(2018: 44,004,867 Deferred shares of 4.5p
each) 1,980 1,980
190,254,867 New Deferred shares of 0.49p
each (2018: nil) 932 -
Total 3,001 2,931
On 13 December 2018 the Company passed an Ordinary resolution to
subdivide the ordinary shares of 0.5 pence each into one new
ordinary share of 0.01 pence each and one new deferred share of
0.49 pence.
The Deferred shares and New Deferred shares have no right to
receive notice of attendance or vote at any general meetings of the
company and no right to receive any dividend or other
distribution.
On 14 December 2018, the Company raised GBP400k (gross) by the
issue of 400,000,000 Ordinary shares of 0.01p each at a cash price
of 0.1p per share. Net proceeds after expenses amounted to
GBP364k.
On 17 May 2019, the Company raised GBP300k (gross) by the issue
of 300,000,000 Ordinary shares of 0.01p each at a cash price of
0.1p per share. Net proceeds after expenses amounted to
GBP285k.
Share options (see note 20)
At the year end date, the following options had been
granted:
Date of Grant At 1 July At 30 June Exercise Exercisable Exercisable
2018 2019 price from to
1 April 2010 295,694 281,371 54.5p April 2013 April 2020
25 November 2010 91,743 - 54.5p November 2013 November 2020
31 October 2014 35,000 35,000 54.5p October 2017 October 2024
Total 422,437 316,371
106,066 share options were cancelled or lapsed in the year under
review.
18. Operating lease commitments
At the year end date, the Group had the following total
commitments under non-cancellable operating leases:
Group Land & buildings
2019 2018
GBP'000 GBP'000
Expiry date:
Within one year - 15
Between two and five years - -
- 15
The Company had no commitments under non-cancellable operating
leases at 30 June 2019 and 2018.
19. Financial instruments
Financial assets
Amortised Fair value Total Amortised Fair value Total
cost (loans through cost (loans through profit
and receivables) profit and receivables) and loss
and loss
Group Group Group Company Company Company
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Trade and other
receivables (excluding
prepayments) 77 - 77 - - -
77 - 77 - - -
Financial liabilities
Amortised Fair value Total Amortised Fair value through Total
cost (loans through cost (loans profit and loss
and payables) profit and payables)
and loss
Group Group Group Company Company Company
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Trade and other payables 136 - 136 27 - 27
136 - 136 27 - 27
20. Share based payments
The Company has issued share options under a share option scheme
for directors and employees set up in November 2006 under which
approved and unapproved share options were granted prior to the
flotation of the Company in December 2006. The Company adopted the
"Sabien Technology Group Share Option Plan" at the time of
flotation and it is intended that options will only be granted
under this scheme in future.
Under this scheme, directors and employees hold options to
subscribe for 0.5p Ordinary shares in Sabien Technology Group Plc
at prices based on the mid-market price on the day preceding the
relevant share option grant. See note 17 for details of options in
issue at the year end date. There are no performance conditions
attached to these options. No options were granted in the financial
year.
The value of the options is measured using the QCA-IRS Option
Valuer based on the Black Scholes model. The inputs into the Black
Scholes model were as follows:
2019 2018
Share price at date of grant - -
Exercise price at date of grant 54.5p 54.5p
Weighted average fair value - -
Volatility 30% 30%
Expected life 3 years 3 years
Risk free interest rate 4.75% 4.75%
Expected volatility was determined by reference to volatility
used by other similar companies.
The expected life used in the model reflects the lack of
performance conditions attached to the options granted.
The Group has recognised a charge of GBPnil (2018: GBP1k)
arising from the share based payments noted above in profit and
loss for the year ended 30 June 2019 and this has been credited to
Other Reserves in the Consolidated and Company Statements of
Financial Position.
The following reconciles the outstanding share options granted
under the employee share option scheme at the beginning and end of
the financial year:
Weighted Weighted
Number average Number average
2019 exercise price 2018 exercise price
2019 2018
Balance at
beginning of
the financial
year 422,437 53.70 557,437 53.70
Granted during
the year - - - -
Cancelled during
the year (106,066) - (135,000) -
Balance at end
of the financial
year 316,371 54.0 422,437 54.0
Weighted average
remaining
contractual life 1.26 years - 2.03 years -
21. Related party transactions
Key management personnel are those persons having authority and
responsibility for planning, controlling and directing the
activities of the Group. In the opinion of the Board, the Group's
key management personnel are the Directors of Sabien Technology
Group Plc. Information regarding their remuneration is given in the
Remuneration Report. The Company entered into service agreements
with Karl Monaghan, Dr Martin Blake, Bruce Gordon, Charles
Goodfellow and John Taylor with entities either controlled by them
or in which they have an interest as shareholders. Fees are paid in
accordance with those agreements. The remuneration of key
management is included within the disclosure detailed in note 7 and
is analysed in the Remuneration Report.
Charles Goodfellow is employed by the Group's joint brokers,
Peterhouse Capital Limited. Fees paid to Peterhouse Capital Limited
are proposed to the Board and approved by the Board as a whole.
Fees paid to Peterhouse Capital Limited in the year were GBP64k
(2018: GBPnil) and at the year end the amounts due to Peterhouse
Capital Limited were GBPnil (2018: GBPnil).
During the year, Sabien Technology Limited was charged GBP53k
(2018: GBP59k) by way of management charges by Sabien Technology
Group Plc, its parent company. Sabien Technology Limited repaid
GBP219k (2018: GBP115k) during the year in respect of working
capital loans and at the year end the amount outstanding, excluding
a provision of GBPnil (2018: GBP74k) charged in the year, was
GBP41k (2018: GBP260k).
22. Subsequent events
On 3 September 2019 the Group announced a subscription of
296,751,623 new ordinary shares at a price of 0.11 pence per
subscription share raising GBP326k (gross).
NOTE
The financial information set out in this announcement does not
constitute the Group's statutory financial statements for the year
ended 30 June 2019 or 2018, but is derived from these financial
statements. The financial statements for the year ended 30 June
2018 have been delivered to the Registrar of Companies. The
financial statements for the year ended 31 June 2019 will be
forwarded to the Registrar of Companies following the Company's
Annual General Meeting. The Auditors have reported on these
financial statements; their reports were unqualified and did not
contain statements under Section 498(2) or (3) of the Companies Act
2006.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR LFMBTMBATTLL
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