Sabien Technology Group Interims - 2020

Investor news

Published: 20 March

Type: Investor news

Year: 2020

RNS Number : 8914G
Sabien Technology Group PLC
20 March 2020

For immediate release

20 March 2020

Sabien Technology Group Plc

("Sabien", the "Company" or the "Group")

 

Unaudited Interim Results for the six months ended 31 December 2019

 

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 2019 (the "Period") (comparatives are shown for the comparable period in the previous year unless otherwise stated):

 

Highlights in the Period

 

·               Sales revenue £159k (2018: £342k)

·               Sales orders received £90k (2018: £132k)

·               M2G units sold 56 (2018: 166)

·               Gross profit £124k (2018: £291k)

·               Gross profit margin 78% (2018: 85%)

·               Loss before tax £561k (2018: £207k loss)

·               Net cash at the end of the period £546k (£282k as at 31 December 2018)

·               Overseas sales £22k (2018: £39k)

·               Fundraise of £326k (gross) to provide working capital to develop the Group's strategy.

Highlights since the period end

·               Completion of the £300k (gross) fundraise announced in December 2019 to provide working capital to support the Group's stated strategy.

·               £100k (gross) total subscription and payment of directors' fees by issue of share capital.

·               Suspension of share trading and announcement of potential transaction with Ptarmigan Destinations Holdings SA ("PDHSA"), previously announced as Ptarmigan SA.

·               Orders received from two new indirect partners.

·               Net cash balance of £705k to 19 March 2020.

Chairman's statement

The Period has seen significant change for Sabien.  As previously announced, in September 2019 I was appointed Chairman of the Group and new Non-executive Directors - Cédriane de Boucaud Truell and Marco Nijhof joined the Board.  At the same time John Taylor stepped down from the Board and in November 2019, the founder and CEO Alan O'Brien resigned from the Company and I became Executive Chairman.  Both directors left with the Board's thanks.

 

Since the new Board was put in place, a review of Sabien's strategy has been carried out and is ongoing.  The Board previously announced that it was examining broadening Sabien's scope into health and medical rehabilitation destination sectors which might complement and support the development of disruptive green energy-focussed technologies. 

 

Following the period end, the Company confirmed that it was in discussions regarding the possible acquisition of PDHSA by the Company. PDHSA is a health and leisure resort development company based in the valley of Evolene, in the Canton of Valais, Switzerland and is owned by the Truell family, a 25% shareholder of Sabien.

 

Should such a transaction proceed on the currently envisaged terms, it would be classified as a reverse takeover in accordance with the AIM Rules for Companies. Accordingly, the Company's shares were suspended from trading on 20 January 2020 and will remain so until either the publication of an admission document setting out, inter alia, details of the proposed transaction or until confirmation is given that these discussions have ceased.

 

Shareholders should note that the proposed acquisition remains subject to a number of pre-conditions, due diligence and the market impact of Covid-19. While there can be no certainty at this time that the acquisition will be successful, it has been proceeding as envisaged to date.

 

Trading for the existing Sabien business has been challenging in the Period but accelerated sales were expected over the remainder of the financial year due to the Company's change in sales strategy and the recruitment of additional sales staff. However, the Covid-19 epidemic will probably have an adverse impact on Sabien's operating revenues as customers move to home working and reduce spending on new projects. Nevertheless, it was reassuring to receive a new order on 19 March 2020 from an existing customer for a further 95 M2G units. This single order is worth the total of all sales reported in first six months of the year and is a good start to the second half of the year.

 

The Board is confident in its ability to manage and safeguard shareholder interests as well as can be reasonably expected through this unprecedent period of uncertainty.

 

 

 

 

 

Richard Parris

Executive Chairman

 

2 0  March 2020

 

                                                           

For further information please contact:

 

 

 

 

Sabien Technology Group plc

 

Richard Parris and Cédriane de Boucaud Truell

+44(0)20 7993 3700

 

SPARK Advisory Partners Limited

Neil Baldwin/Matt Davis

www.s parkadvisorypartners.com (Nominated Advisor)

 

+44(0)20 3 368 3550

 

This announcement is inside information for the purposes of Article 7 of Regulation 596/20014.

 



 

 

Sabien Technology Group Plc

Unaudited Condensed Group Statement of Comprehensive Income for the period ended 31 December 2019

 

Notes

6 months to 31 December 2019

6 months to 31 December 2018

Year to

30

June

2019

 

 

Unaudited

Unaudited

Audited

 

 

£'000

£'000

£'000

 

 

 

 

 

Revenue

 

159

342

1,379

Cost of Sales

 

(35)

(51)

(200)

 

 

 

 

 

Gross Profit

 

124

291

1,179

 

 

 

 

 

Administrative expenses

 

(685)

(498)

(996)

 

 

 

 

 

Operating (loss)/profit

 

(561)

(207)

183

 

 

 

 

 

Investment revenues

 

-

-

(1)

 

 

 

 

 

(Loss)/profit before tax

 

(561)

(207)

182

 

 

 

 

 

Tax credit

 

-

-

-

 

 

 

 

 

(Loss)/profit for the period attributable to equity holders of the parent company

 

(561)

(207)

182

 

Other comprehensive income for the period

 

-

-

-

 

 

 

 

 

Total comprehensive income for the period

 

(561)

(207)

182

 

 

 

 

 

(Loss)/earnings per share in pence - basic

3

(0.05)p

(0.1)p

0.04p

(Loss)/earnings per share in pence - diluted

3

(0.05)p

(0.1)p

0.04p

 

 

 

 

 

 



Sabien Technology Group Plc

Unaudited Condensed Group Statement of Financial Position as at 31 December 2019

 

Notes

31 December 2019

31 December 2018

 30 June

 2019

 

 

Unaudited

Unaudited

Audited

 

 

£'000

£'000

£'000

ASSETS

 

 

 

 

Non-current assets

 

 

 

 

Property, plant and equipment

 

19

26

20

Other intangible assets

 

127

185

151

Total non-current assets

 

146

211

171

 

 

 

 

 

Current assets

 

 

 

 

Inventories

 

40

74

55

Trade and other receivables

 

69

59

117

Cash and cash equivalents

 

546

282

738

Total current assets

 

655

415

910

 

 

 

 

 

TOTAL ASSETS

 

801

626

1,081

 

 

 

 

 

EQUITY AND LIABILITIES

 

 

 

 

Current liabilities

 

 

 

 

Trade and other payables

 

127

355

136

Total current liabilities

 

127

355

136

 

 

 

 

 

EQUITY

 

 

 

 

Equity attributable to equity holders of the parent

 

 

 

 

 

 

 

 

 

Share capital

4

3,031

2,971

3,001

Other reserves

 

1,850

1,348

1,601

Retained earnings

 

(4,207)

(4,048)

(3,657)

Total equity

 

674

271

945

TOTAL EQUITY AND LIABILITIES

 

801

626

1,081



Sabien Technology Group Plc

 

Unaudited Condensed Group Cash Flow Statement for the period ended 31 December 2019

 

 

 

 

 

 

 

 

 

 

6 months

to

31 December 2019

6 months

to

31 December 2018

Year

to

30 June

 2019

 

 

Unaudited

Unaudited

Audited

 

 

£'000

£'000

£'000

Cash flows from operating activities

 

 

 

 

 

 

 

 

 

(Loss)/profit before taxation

 

(561)

(207)

182

Adjustments for:

 

 

 

 

Depreciation and amortisation

 

27

28

68

Finance expense

 

-

-

1

Decrease/(increase) in trade and other receivables

 

48

56

(7)

Decrease in inventories

 

15

5

24

(Decrease)/increase in trade and other payables

 

(9)

28

(153)

 

 

 

 

 

Cash (used in)/generated by operations

 

(480)

(90)

115

 

 

 

 

 

Corporation taxes recovered

 

-

-

-

 

 

 

 

 

Net cash (outflow)/inflow from operating activities

 

(480)

(90)

115

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

 

Net proceeds from share issue

 

290

379

649

Purchase of property, plant and equipment and intangible assets

 

(2)

(5)

(4)

Finance costs

 

-

-

(1)

 

 

 

 

 

Net cash inflow from investing activities

 

288

374

644

 

 

 

 

 

Net (decrease)/increase in cash and cash equivalents

(192)

284

759

Cash and cash equivalents at beginning of period

738

(21)

(21)

Cash and cash equivalents at end of period

546

263

738

 

 

 

 

Cash and cash equivalents comprise:

 

 

 

Cash and cash equivalents

546

282

738

Invoice financing (included in other payables)

-

(19)

-

 

546

263

738



Sabien Technology Group Plc

 

Unaudited Condensed Group Statement of Changes in Equity as at 31 December 2019

 

Share capital

Share premium

Share based payment reserve

Retained earnings

Total equity

 

£'000

£'000

£'000

£'000

£'000

Balance at 1 July 2018

2,931

981

45

(3,843)

114

 

Loss for the period

1 July 2018 to

31 December 2018

-

-

-

(207)

(207)

Share issue

40

324

-

-

364

 

Transfer to retained earnings re lapsed options

-

-

(2)

2

-

 

Balance at 31 December 2018

2,971

1,305

43

(4,048)

271

 

Profit for the period

1 January 2019 to 30 June 2019

-

-

-

389

389

 

Share issue

30

255

-

-

285

 

Transfer to retained earnings re lapsed options

-

-

(2)

2

-

 

Balance at 30 June 2019

3,001

1,560

41

(3,657)

945

 

Loss for the period

1 July 2019 to

31 December 2019

-

-

-

(561)

(561)

Share issue

30

296

-

-

326

Share issue expenses

-

(36)

-

-

(36)

 

Transfer to retained earnings re lapsed options

-

-

(11)

11

-

 

Balance at 31 December 2019

3,031

1,820

30

(4,207)

674



Sabien Technology Group Plc

Notes to the Financial Statements for the period ended 31 December 2019

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, despite the losses incurred in the past six month period and the uncertainty as to the timing of future profitability, 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 reduction in the six months to 56 units (2018: 166). Despite this, after taking into account the capital raise completed in January 2020 of £300k (gross) and the £100k (gross) subscription and Director fee capitalisation, 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 interim consolidated financial statements have been prepared on the historical cost basis and are presented in £'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 2019. 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.

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 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              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

·      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 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.

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 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.

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 (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 the statement of comprehensive income on the straight line basis over the lease term.

IFRS 16 Leases will be applied 1 July 2020. Assets held under finance leases, operating leases and hire purchase contracts will be capitalised in the statement of financial position and depreciated over their expected useful lives. The interest element of the rental obligation will be charged to the profit or loss.

l)          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.

m)        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 taxable 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 interim financial information. The secondary reporting format is by geographical analysis by destination. Non-UK revenues amounted to £22k which were 14% of total revenues for the period.

During the period, sales to the Group's largest customers were as follows:

Sales revenue

% of total revenue

£'000

Customer 1

55

35

Customer 2

43

27

Customer 3

22

14

3.         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 to 31 December 2019

6 months to 31 December 2018

Year to

 30

 June

 2019

Unaudited

Unaudited

Audited

£'000

£'000

£'000

(Loss)/profit for the period

(561)

(207)

182

Basic and Diluted:

Weighted average number of shares in issue

1,088,089,282

223,588,200

473,588,200

(Loss)/earnings per share - basic and diluted

(0.05)p

(0.1)p

0.04p

4.         Share capital

The Company's issued Ordinary share capital is:

Amount

Number of New Ordinary Shares of 0.01p each

Number of Deferred Shares of 4.5p each

Number of New Deferred Shares of 0.49p each

Allotted, called up and fully paid:

At 31 December 2019

£3,031,169

1,187,006,490

44,004,867

190,254,867

At 30 June 2019

£3,001,493

890,254,867

44,004,867

190,254,867

At 31 December 2018

£2,971,493

590,254,867

44,004,867

190,254,867

On 3 September 2019, the Company raised £326k (gross) by the issue of 296,751,623 New Ordinary Shares of 0.01p each at a price of 0.11p per share. Net proceeds after expenses amounted to £290k.

On 16 December 2019, the Company announced a conditional placing of £300k (gross) through the placing of 200,000,000 New Ordinary Shares of 0.01p each at a price of 0.15p per share.  The placing was confirmed by a General Meeting on 8 January 2020.  Net proceeds after expenses amounted to £288k.

5.         Seasonality

The business of the Group is not seasonal.

6.         Availability

A copy of this Interim Report is available on the Company's website at  http://www.sabien-tech.co.uk


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