TIDMSNT
RNS Number : 7978F
Sabien Technology Group PLC
19 November 2020
Prior to publication, the information contained within this
announcement was deemed by the Company to constitute inside
information for the purposes of Article 7 under the Market Abuse
Regulation (EU) No. 596/2014 ("MAR"). With the publication of this
announcement, this information is now considered to be in the
public domain.
19 November 2020
Sabien Technology Group plc
("Sabien" or the "Company")
Final Results for the year ended 30 June 2020
Update on Proposed Acquisition of Ptarmigan Health Destinations
SA
Sabien Technology Group plc announces its final audited results
for the year ended 30 June 2020.
The Company also provides an update regarding its proposed
acquisition of Ptarmigan Health Destinations SA. The Company's
ordinary shares were suspended from trading on AIM on 20 January
2020, due to the possible acquisition of Ptarmigan Health
Destinations SA ("PHD") by the Company ("Proposed Acquisition") and
will remain so until either it publishes an admission document
setting out, inter alia, details of the Proposed Acquisition or
until confirmation is given that these discussions have ceased.
Under the AIM Rules for Companies (the "AIM Rules"), if neither of
these outcomes is achieved, trading in the Company's ordinary
shares on AIM will be cancelled. Due to market impact of Covid-19,
the Company has been granted an extension from six to twelve months
from 20 January 2020 for publishing such an admission document; or,
to confirm discussions concerning the Proposed Acquisition have
ceased.
Proposed Share Consolidation
In conjunction with the Proposed Acquisition, the Company
intends to complete a share capital reorganisation by way of a
1,000:1 share consolidation (the "Share Consolidation"), subject to
shareholder approval at a general meeting of the Company. On 20
January 2020, the Company's share price was 0.19p per share, so as
at 20 January 2020, this would give a pro forma price of GBP1.90
(or 190p) per share following completion of the Share
Consolidation.
Update regarding the Proposed Acquisition of Ptarmigan Health
Destinations SA
Further to the Company's announcement of 20 January 2020, Sabien
is pleased to announce that it has entered into a Sale and Purchase
agreement to acquire the issued and to be issued share capital of
Ptarmigan Health Destinations SA.
PHD is a health destination company based in the valley of
Evolene, in the Canton of Valais, Switzerland and has as major
shareholders Pension Superfund Private Markets and a Disruptive
Capital Investments II Limited. Pension Superfund Private Markets
and Disruptive Capital Investments II Limited are connected parties
to the Truell Inter-Generational FLP, 25% shareholders in
Sabien.
As at 30 June 2020, PHD had net assets of GBP9,141,204, before
any IP, operational or property revaluation were taken into
account. PHD generated a loss after tax of GBP460,945, as it
continues to invest in its development in Switzerland and
internationally. Full details on PHD will be provided in the
Admission Document.
On completion, the Company, as enlarged by the Proposed
Acquisition, would be renamed Health Destinations plc. Under the
terms of the Sale and Purchase Agreement, Sabien has agreed to
acquire the issued and to be issued share capital of PHD for
consideration of approximately GBP44.48 million to be satisfied by
the issue of ordinary shares in the Company to the vendors of PHD,
at an issue price of 325 pence following the Share Consolidation
(equivalent to 0.325 pence per share prior to the share capital
consolidation). This would result in the issue of approximately
13.7 million new ordinary shares in Sabien.
The Proposed Acquisition is subject to a number of conditions
including shareholder approval at a general meeting of the Company.
As currently envisaged the Proposed Acquisition would be classified
as a reverse takeover in accordance with the AIM Rules for
Companies, however, under the terms of the Sale and Purchase
Agreement, Sabien may progress with the Proposed Acquisition should
the Company's ordinary shares be cancelled from trading on AIM.
The issue price of 325 pence per share represents a premium of
71% to the Company's share price on 20 January 2020 (post Share
Consolidation), immediately prior to the suspension of trading in
the Company's ordinary shares on AIM. In conjunction with the
Proposed Acquisition, the Company expects to complete a placing and
open offer of ordinary shares in the Company, at an issue price of
325p (post Share Consolidation).
Shareholders should note that the Proposed Acquisition is
subject to a number of pre-conditions and due diligence, and there
can be no certainty therefore at this time that the Proposed
Acquisition will proceed as envisaged.
It is noted that Cédriane de Boucaud Truell has an indirect
interest in PHD, and both Cédriane de Boucaud Truell and Marco
Nijhof are directors of PHD and of Sabien. The Proposed Acquisition
will constitute a related party transaction under rule 13 of the
AIM Rules for Companies, and further disclosures on this will be
made in the Admission Document, as required.
Richard Parris, Chairman of Sabien, commented: "The Board is
pleased to update the market on two major achievements. The first
is the completion of a corporate restructuring of the Sabien
operating business to deliver a return to revenue growth. The
second is the accelerating progress of the reverse takeover of
Ptarmigan Health Destinations. This has proven to be a challenging
process to navigate during the Covid pandemic, but I am delighted
the Board has agreed a 71% premium on the suspended share price. I
believe this is a great result for Sabien shareholders. I further
believe the combined business has the potential to significantly
benefit from a post-Covid uplift in the health and wellness
industry and in a green energy investment rebound which will
further reward shareholders."
Further announcements will be made in due course.
For further information:
Sabien Technology Group plc +44 20 7993
Richard Parris, Chairman 3700
Allenby Capital Limited (Nominated Adviser) +44 203 328
John Depasquale / Asha Chotai 5656
Peterhouse Capital Limited (Broker) +44 207 469
Duncan Vasey/ Lucy Williams 0930
A copy of this announcement will be available
from the Company's website at www.sabien-tech.co.uk
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
2020.
Sabien Technology Group highlights 2020
-- Sales for the year GBP0.45m (2019: GBP1.38m)
-- Loss before tax GBP1.41m (2019: GBP0.18m profit)
-- Sales from Alliance Partners GBP0.01m (2019: GBP0.36m)
-- Overseas sales GBP0.02m (2019: GBP0.13m)
-- Exceptional costs of GBP0.58m in relation to legal and
professional fees incurred in relation to the acquisition and
potential reverse takeover of Ptarmigan Health Destinations SA
("PHD")
-- Fund raises of GBP0.73m (gross) to provide working capital
-- Net cash balance at 30 June 2020 was GBP0.78m (30 June 2019: GBP0.74m)
Highlights since the year end
-- Sales of GBP0.15m to 31 October 2020
-- Orders received but not yet invoiced to 16 November 2020 GBP0.3m
-- Net cash balance at 6 November 2020 of GBP0.28m
-- Signing of an SPA to acquire PHD in October 2020. The
structure of the Acquisition, which remains subject to shareholder
approval, is that Sabien would acquire PHD for a consideration of
approximately GBP44.48m be satisfied by the issue of ordinary
shares in Sabien to the vendors of PHD at an issue price of 325
pence per share (following a proposed 1,000:1 share
consolidation).
Financial results
Revenue for the year was GBP0.45m (2019: GBP1.38m). The loss
before taxation was GBP1.41m (2019: GBP0.18m profit).
At 30 June 2020, cash and cash equivalents amounted to GBP0.78m
(2019: GBP0.74m).
Dividend policy
The directors propose no dividends (2019: nil) in the year.
Chairman's Statement
As announced in the 6 July 2020 Trading Update, the COVID-19
pandemic has affected the entire global economy and Sabien has not
escaped its impact. However, in spite of this unprecedented
disruption, Sabien's revenues almost doubled in the second half of
the financial year compared to the first half. This brought total
sales for the year to GBP0.45m (2019: GBP1.38m). The decrease in
full year sales, while disappointing, is explained by last year's
revenues including an exceptional order of GBP0.85m and by three
months of lost sales due to the COVID lockdown in this period.
However, the Board believes that first half sales represent a
"low watermark" after several years of diminishing performance by
the previous Board and management team. Since the new management
team has taken charge earlier this year, sales prospects are
demonstrably strengthening, and consistent year-on-year growth is
expected as the Company transitions into a more realisable go-to
market strategy based on an enhanced product and service
proposition.
In addition, the Board has sought to protect shareholder value
in challenging market conditions by placing a focus on cash
management. During the year cash in the bank increased to GBP0.78m
at 30 June 2020 (2019: GBP0.74m, 2018: GBP0.009m). This included a
COVID business interruption loan of GBP0.18m from NatWest Bank
received on 25 June 2020.
While COVID uncertainty made it impossible to achieve a
profitable performance this year, costs have been tightly
controlled within the operating business as follows:
Following the announcement of major new strategic shareholder on
3 September 2019, the management team was restructured with the
departure of the Alan O'Brien, CEO, (announced 5 November 2019) and
David Bakst, Managing Director (announced 29 May 2020). Until
further notice these functions will be filled by me. These changes
will contribute an annual saving on the operating company payroll
of more than GBP200,000 from 1 June 2020.
The Board placed 85% of the workforce on COVID-19 furlough from
31 March 2020. This mitigated payroll expenses for 25% of the
financial year and has helped to preserve jobs and expertise.
During this period the Company was unable gain access to customer
sites to undertake any installations, but background sales and
planning tasks were undertaken to the extent possible using
non-furloughed staff. As at 1 November 2020 all staff have returned
to at least part-time employment.
The Company's development project to "cloud enable" its existing
M2G user base (up to circa 10,500 units) is progressing well. This
will enable upselling opportunities to existing customers and
provide a source of new subscription revenue within the next
period. For the first time in the Company's history this will
enable recurring revenues to be generated from its large installed
base. It is anticipated this will also reduce the time to secure
new orders and support an international channel partner programme.
Sabien is on the point of starting a trial with key customers to
market test the product with revenues expected to start following
the trials.
Trading for the existing Sabien business has remained
challenging, but it has been pleasing that the team has been able
to continue to access most of its customer sites and complete
large-scale rollout programmes.
Also during the period since July 2020, Sabien was granted an
extension to 20 January 2021 to publish an admission document in
relation to the acquisition of Ptarmigan Health Destinations SA
("PHD") ("the Acquistion"), deemed to be a reverse takeover in
accordance with the AIM Rules for Companies. PHD is a health
destination company based in the valley of Evolene, in the Canton
of Valais, Switzerland and has as major shareholders Pension
Superfund Private Markets and Disruptive Capital Investments II
Limited. Pension Superfund Private Markets and Disruptive Capital
Investments II Limited are connected parties to the Truell
Inter-Generational FLP, 25% shareholders in Sabien.
Sabien has entered into a Sale and Purchase Agreement ("SPA")
with the vendors of PHD . The structure of the Acquisition, which
remains subject to shareholder approval, is that Sabien would
acquire PHD for a consideration of approximately GBP44.48m to be
satisfied by the issue of ordinary shares in Sabien to the vendors
of PHD at an issue price of 325 pence per share (following a
proposed 1,000:1 Share Consolidation).
The Company's ordinary shares were suspended from trading on AIM
in January 2020 and will be until an admission document is
published. Shareholders should note that the Proposed Acquisition
is subject to a number of conditions including shareholder approval
at a general meeting of the Company and due diligence. As currently
envisaged the Acquisition would be classified as a reverse takeover
in accordance with the AIM Rules for Companies. There is no
certainty at this time that the Proposed Acquisition will proceed
as envisaged.
In summary, the Sabien team is excited about the opportunity the
new cloud enabled M2G brings to deliver new recurring revenues to
the business. The marketing efforts with the Sabien partner network
are also delivering promising new pipeline opportunities. Combined
with the opportunity that the PHD reverse takeover brings, the
business is very well placed to recover and grow following the
COVID-19 pandemic.
Richard Parris
Executive Chairman
18 November 2020
STRATEGIC REPORT
For the year ended 30 June 2020
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 marketplace, 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 timeline 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.
The Company introduced a rental model option during the 2018
financial year 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 8.
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
-- Brand awareness and maintenance of reputation
-- Employee retention
-- Raising further finance
-- Trading solvently in the short/medium term
-- UK Energy Efficiency Barriers
-- Impact of COVID-19
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 underdeveloped 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 Simple Payback
(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 sales in the year of GBP0.45m (2019:
GBP1.38m). Alliance partners contributed GBP0.014m of sales
representing 2.88% 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 network requires a level of M2G operational support in
knowledge transfer/sharing and product training.
During the course of the financial year, overseas sales
represented 4.4% of total sales at GBP0.02m (2019 - GBP0.13m). 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 offers pilots but only on a paid basis and only to
customers with large estates.
-- COVID-19
While there remains significant uncertainty as to the future
impact of the COVID-19 pandemic, the Group continues to conduct
ongoing risk assessments of the potential impact of the pandemic on
its business.
Customer demand has been affected as potential customers have
been more reluctant to commit to future spending given the
uncertainties around the pandemic. The Group continues to work with
its main supplier to actively address the risk of disruption. The
Group has taken actions to enhance its operational resilience and
position the business towards becoming fully operational. Whilst
the Group took advantage of the Coronavirus Job Retention Scheme,
the number of employees now working has progressed to near normal
levels, whether through working on site in accordance with
protective safety measures or through working remotely from home.
In addition, the business continues to drive cost control measures.
Despite the impact of the pandemic, liquidity remains strong. The
Group drew down a Coronavirus Business Interruption Loan in the
year to provide additional support. Cash flow forecasting is
performed by the Group on a monthly basis to ensure that there is
sufficient cash to meet operational needs and maintain adequate
headroom.
The COVID-19 pandemic could result in changes to the outlook in
the Group's markets. Areas of the business that could be impacted
include a decrease in spending by key customers, the failure of
suppliers to source parts to manufacture our units, the requirement
for the Group or its suppliers to reduce site operational levels,
the inability to meet delivery requirements, the inability to
adequately staff the business, and an increase in the cost or lack
of availability of funding. Any of the above could have a material
adverse effect on the Group. However, the uncertainties surrounding
the development of this pandemic make it difficult to predict the
full extent to which the Group may be affected.
4. Key Performance Indicators ("KPIs")
The Group has identified a number of financial and non-financial
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
Group sold 193 units (2019: 823 units) and the gross profit margin
was 80.4% (2019: 85.5%). The margin has slightly reduced
predominantly due to increased installation revenue this year which
generally achieves lower gross profit margins compared to direct
stock sales. 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.
5. Strategy and future developments
The Group intends to invest for growth in the following
areas:
-- Utilise its existing research and development pipeline to make existing hardware (M2G) 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.
-- Development of PHD operations following the completion of the Acquisition.
This report was approved and authorised for issue by the Board
on 18 November 2020 and signed on its behalf by:
Richard Parris
Executive Chairman
18 November 2020
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2020
2020 2019
Notes GBP'000 GBP'000
Revenue 454 1,379
Cost of sales (89) (200)
Gross profit 365 1,179
Administrative expenses (1,250) (996)
Exceptional item 6 (579) -
Operating (loss)/profit 5 (1,464) 183
Other income 9 55 -
Finance expenses - (1)
(Loss)/profit before tax (1,409) 182
Tax credit 10 - -
(Loss)/profit for the year
attributable to equity holders
of the parent company (1,409) 182
Other comprehensive income - -
Total comprehensive income
for the year (1,409) 182
(Loss)/earnings per share in
pence - basic 11 (0.11) 0.04
(Loss)/earnings per share in
pence - diluted 11 (0.11) 0.04
The earnings per share calculation relates to both continuing
and total operations. The notes below form part of these financial
statements.
Consolidated and Company Statements of Financial Position
As at 30 June 2020 Company Reg No: 05568060
Group Company
2020 2019 2020 2019
Notes GBP'000 GBP'000 GBP'000 GBP'000
ASSETS
Non-current assets
Property, plant and equipment 12 17 20 - -
Intangible assets 13 104 151 - -
Investment in subsidiaries 14 - - - -
Total non-current assets 121 171 - -
Current assets
Inventories 15 39 55 - -
Trade and other receivables 16 83 117 450 54
Cash and bank balances 17 778 738 596 717
Total current assets 900 910 1,046 771
TOTAL ASSETS 1,021 1,081 1,046 771
EQUITY AND LIABILITIES
Current liabilities
Trade and other payables 18 627 136 515 27
Total current liabilities 627 136 515 27
Non-current liabilities
Borrowings 19 181 - - -
Total non-current liabilities 181 - - -
EQUITY
Equity attributable to equity
holders of the parent
Share capital 20 3,058 3,001 3,058 3,001
Other reserves 2,181 1,601 2,181 1,601
Retained earnings (5,026) (3,657) (4,708) (3,858)
Total equity 213 945 531 744
TOTAL EQUITY AND LIABILITIES 1,021 1,081 1,046 771
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 GBP890k (2019: GBP19k loss). There is no
other comprehensive income in the Parent Company.
The financial statements were approved and authorised for issue
by the Board on 18 November 2020 and were signed on its behalf
by:
Richard Parris
Executive Chairman
18 November 2020
The notes below form part of these financial statements.
Consolidated and Company Cash Flow Statements
For the year ended 30 June 2020
Group Company
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
Cash flows from operating activities
(Loss)/profit before taxation (1,409) 182 (890) (19)
Adjustments for:
Depreciation and amortisation 53 68 - -
Loss on disposal of fixed assets 1 - - -
Impairment of investment in subsidiary - - 160 -
Finance expense - 1 - -
Decrease / (increase) in trade
and other receivables 34 (7) (396) 144
Decrease in inventories 15 24 - -
Increase/(decrease) in trade and
other payables 491 (153) 488 (65)
Net cash (outflow)/inflow from
operating activities (815) 115 (638) 60
Cash flows from investing activities
Investment in subsidiary - - (160) -
Purchase of property, plant and
equipment (3) (4) - -
Net cash used in investing activities (3) (4) (160) -
Cash flows from financing activities
Proceeds from borrowings 181 - - -
Proceeds from share issues 726 700 726 700
Share issue costs (49) (51) (49) (51)
Finance costs - (1) - -
Net cash generated by financing
activities 858 648 677 649
Net increase/(decrease) in cash
and cash equivalents 40 759 (121) 709
Cash and cash equivalents at the
beginning of the year 738 (21) 717 8
Cash and cash equivalents at the
end of
the year 778 738 596 717
Cash and cash equivalents comprise:
Cash and cash equivalents 778 738 596 717
Invoice financing (included in
other payables) - - - -
778 738 596 717
The notes below form part of these financial statements.
Consolidated Statement of Changes in Equity
For the year ended 30 June 2020
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
2018 2,931 981 45 (3,843) 114
Changes in equity
for year
Loss 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
Changes in equity
for year
Loss for the year - - - (1,409) (1,409)
Share issues 57 669 - - 726
Share issue costs - (49) - - (49)
Transfer to retained
earnings re lapsed
options - - (40) 40 -
Balance at 30 June
2020 3,058 2,180 1 (5,026) 213
The notes below form part of these financial statements.
Notes to the Consolidated Financial Statements
For the year ended 30 June 2020
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 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:
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 at 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 15 and 16.
Impairment testing of trade receivables is described in note
16.
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 18.
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 when signed agreements
are exchanged between the two parties for the manufacture and/or
delivery of goods. Where the Group is responsible for the project
management of the installations, revenue is normally recognised
upon installation at the customer site, however there are occasions
when the sale of the product and the installation are invoiced and
recognised separately when each element is complete. 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)
At inception of a contract, the Group assesses whether a
contract is, or contains a lease. A lease is defined as 'a
contract, or part of a contract, that conveys the right to use an
asset (the underlying asset) for a period of time in exchange for
consideration'.
At lease commencement date, the Group recognised a right of use
asset and a lease liability on the balance sheet. The right of use
asset is measured at cost, which is made up of the initial
measurement of the lease liability, any initial direct costs
incurred by the Group, an estimate of any costs to dismantle and
remove the asset at the end of the lease and any lease made in
advance of the lease commencement date (net of any incentives
received).
The Group depreciates the right of use asset on a straight-line
basis from the lease commencement date to the earlier of the end of
the useful like of the right of use asset or the end of the lease
term. The Group also assesses the right of use asset for impairment
when such indicators exist. At the commencement date, the Group
measures the lease liability at the present value of the lease
payments unpaid at the date, discounted using the interest rate
implicit in the lease if that rate is readily available or the
Group's incremental borrowing rate. Lease payments included in the
measurement of the lease liability are made up of fixed payments,
variable payments based on an index or rate, amounts expected to be
payable under a residual value guarantee, and payments arising from
purchase and extension options reasonably certain to be
exercised.
Subsequent to initial measurement, the liability will be reduced
for payments made and increased for interest. It is remeasured to
reflect any reassessment or modification, or if there are changes
to fixed payments. When the lease liability is remeasured, the
corresponding adjustment is reflected in the right of use asset, or
profit and loss if the right of use asset is already reduced to
zero.
The Group has elected to account for short-term leases and
leases of low value assets using the practical expedients. Instead
of recognising a right of use assert and lease liability, the
payment in relation these are recognised as an expense in profit or
loss on a straight-line basis over the lease term. 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
New standards impacting the Group that have been adopted in the
annual financial statements for the year ended 30 June 2020, and
which have given rise to changes in the Group's accounting policies
are:
IFRS 16 Leases
IFRS 16 was effective from 1 July 2019 and has been adopted for
the year ended 30 June 2020 using the full retrospective method.
IFRS 16 is a significant change to lease accounting and all leases
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.
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 Group 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
Certain new accounting standards and interpretations have been
issued but have not been applied by the Group in preparing these
financial statements as they are not as yet effective. These
standards are not expected to have a material impact on the Group
in the current or future periods and on foreseeable future
transactions.
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; and
-- borrowings.
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 2020 GBP'000 GBP'000 GBP'000 GBP'000
Trade and other
payables 627 - - -
Borrowings - 36 109 36
At 30 June 2019
Trade and other
payables 136 - - -
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 an increase in post- tax loss for the year of GBP1k
(2019: 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 2020 Euro and
US dollar exchange rates would have increased the Group's loss
after tax by less than GBP1k (2019: 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
Key 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 considered 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 22 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 reduction to 193 units (2019: 823 units).
Following the reduction in sales revenue the Group incurred a
loss of GBP1,409,000 in the year (2019: profit of GBP182,000). This
condition indicates the existence of a material uncertainty in
respect of going concern. However, the directors are taking steps
to address this uncertainty and which they expect will return the
Group to profitability.
The directors have also considered the impact of the COVID-19
pandemic, and the measures taken to control it, on the Group. The
directors have taken steps to mitigate the impact including the
furloughing of staff under the job retention scheme and taking
advantage of the Coronavirus Business Interruption Loan Scheme. The
directors have therefore taken steps to safeguard the assets of the
Group and to enable the Group to continue in business and meet its
liabilities as they fall due.
The directors have prepared cash flow forecasts based on the
conversion of sales pipeline to contracted sales revenue although
there can be no certainty that the sales pipeline will be converted
into sales revenue in accordance with the cash flow forecasts.
The Acquisition will be satisfied by the issue of ordinary
shares in Sabien to the vendors of PHD as detailed in Note 24.
However, the Directors intend to raise further equity funding to
enable the enlarged group to develop further, following completion
of the Acquisition. The Directors are confident that this funding
will be obtained.
The cash flow forecasts confirm that the Group will have
sufficient working capital to settle its liabilities as they fall
due for a period of not less than twelve months from the date of
the approval of these consolidated financial statements.
Consequently, the consolidated financial statements have been
prepared on a going concern basis.
(iv) Impairment of investments
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 14.
(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.
The Group and Company was loss making in the current financial
year and thus a deferred tax asset has not been 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 GBP6.4m.
(vi) Impairment of 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
4% of the total and are analysed as follows:
Geographical information Year ended 30 Year ended
June 2020 30
June 2019
% of total % of total
Sales revenue revenue Sales revenue revenue
GBP'000 GBP'000
UK 434 96 1,247 90
Other 20 4 132 10
Total 454 100 1,379 100
During the period, sales to the group's largest customers were
as follows:
Sales revenue % of total
revenue
GBP'000
Customer 1 157 35
Customer 2 108 24
No other single customer represented more than 10% of the sales
revenue for the year.
5. Operating (loss)/profit
Operating (loss)/profit is stated after
charging/(crediting):
Year ended Year ended 30
30 June 2020 June 2019
GBP'000 GBP'000
Depreciation of property, plant & equipment 6 21
Amortisation of intangible assets 47 47
Cost of inventories recognised as an
expense 55 69
6. Exceptional item
Year ended Year ended 30
30 June 2020 June 2019
GBP'000 GBP'000
Legal and professional fees 579 -
579 -
Exceptional legal and professional fees comprise costs incurred
in respect of the PHD acquisition and reverse takeover project and
readmission to AIM.
7. Auditors' remuneration
Year ended Year ended
30 June 2020 30 June 2019
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 20 18
Total audit fees 30 28
Fees payable to the Company's auditors
for:
- other services 5 6
- corporate finance 100 -
Total other fees 105 6
8. Staff costs
Year ended 30 June Year ended
2020 30 June 2019
GBP'000 GBP'000
Wages and salaries 760 525
Social security costs 63 63
823 588
The average monthly number of employees, including directors,
during the year was as follows:
Year ended 30 June Year ended
2020 30 June 2019
Nos. Nos.
Directors 4 3
Administration 8 7
12 10
The remuneration of key management personnel are detailed in
note 23 and in the Remuneration Report.
9. Other income
Year ended 30 June Year ended
2020 30 June 2019
GBP'000 GBP'000
Furlough grants 55 -
55 -
Other income in the year represents furlough grants received
under the government job retention scheme.
10. Corporation tax
Year ended Year ended
30 June 2020 30 June 2019
GBP'000 GBP'000
Current tax - -
Total tax for the year - -
(Loss)/profit before tax (1,409) 182
Tax on (loss)/profit on ordinary activities
at standard UK corporation tax rate
of 19% (2019: 19%) (268) 35
Expenses not deductible for tax purposes 128 4
Depreciation in excess of capital allowances - 4
Utilised tax losses (9) (43)
Tax losses carried forward 149 -
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 GBP6.4m (2019: GBP5.6m) which at
the current tax rate would equate to GBP1.22m (2019: GBP1.06m).
11. Earnings per share
The calculation of earnings per share is based on the loss for
the year attributable to equity holders of GBP1,409k (2019: GBP182k
profit) and a weighted average number of shares in issue during the
period of 1,270,881,220 (2019: 473,588,200). At the year end,
options over 35,000 shares (2019: 316,371) were in issue, but have
not been taken into account in calculating diluted earnings per
share as they are anti-dilutive.
12. Property, plant and equipment
Group 2020 2019
GBP'000 GBP'000
Cost
At 1 July 148 310
Additions 3 4
Disposals (123) (166)
At 30 June 28 148
Depreciation
At 1 July 128 273
Charge for the year 6 21
Reversed on disposals (123) (166)
At 30 June 11 128
Net Book Value
At 30 June 2020 17 20
At 30 June 2019 20 37
The Company held no property, plant and equipment at 30 June
2020 and 2019.
13. Intangible assets
Group 2020 2019
GBP'000 GBP'000
Intellectual Property
Cost
At 1 July and 30 June 943 943
Amortisation
At 1 July 792 745
Charge for the year 47 47
At 30 June 839 792
Net Book Value
At 30 June 2020 104 151
At 30 June 2019 151 198
Intellectual Property represents the rights to the M2G product
acquired from the inventors. An impairment review performed in
accordance with IAS 36 'Impairment of Assets' as detailed in note
14, determined that no impairment was necessary at 30 June
2020.
The remaining amortisation period for Intellectual Property is 3
years. The Company held no intangible assets at 30 June 2020 and
2019.
14. Investment in subsidiaries
Company 2020 2019
GBP'000 GBP'000
Cost
At 1 July 6,297 6,297
Additions 160 -
At 30 June 6,457 6,297
Impairment provision
At 1 July 6,297 6,297
Impairment in year 160 -
At 30 June 6,457 6,297
Net Book Value
At 30 June 2020 - -
At 30 June 2019 - -
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 IP Ownership of
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% (2019: 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% (2019: 8%) (rental
revenue growth rate 8% (2019:8%)) has been applied over the ten
years of the cash flow forecast.
15. Inventories
Group 2020 2019
GBP'000 GBP'000
Goods held for resale 40 55
The Company held no inventories at 30 June 2020
and 2019.
16. Trade and other receivables
2020 2019 2020 2019
Group Group Company Company
GBP'000 GBP'000 GBP'000 GBP'000
Trade receivables 41 77 - -
Other receivables 42 40 400 13
Amounts due from group undertakings - - 50 41
83 117 450 54
The value of trade receivables quoted in the table above also
represents the fair value of these items and are due within one
year.
Other receivables in the Company include legal and professional
fees of GBP314,000 in respect of the acquisition and potential
reverse takeover of PHD.
Amounts due from group undertakings is covered by a GBP250,000
loan facility (2019: 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 2020, the Group had no
receivables which were considered to be impaired and against which
a full provision has been made. Trade receivables of GBP14k (2019:
GBP1k) were past due but not impaired. The ageing analysis of these
trade receivables is as follows:
2020 2019
GBP'000 GBP'000
Up to 3 months 41 77
3 to 6 months - -
More than 6 months - -
41 77
The carrying amounts of the Group's trade and other receivables
are denominated in the following currencies:
2020 2019
GBP'000 GBP'000
Pounds sterling 83 116
Euros - 1
83 117
17. Cash and bank balances
2020 2019 2020 2019
Group Group Company Company
GBP'000 GBP'000 GBP'000 GBP'000
Cash and bank balances 778 738 596 717
18. Trade and other payables
2020 2019 2020 2019
Group Group Company Company
GBP'000 GBP'000 GBP'000 GBP'000
Trade payables 368 21 317 4
Social security and other
taxation 12 4 - (14)
Accruals and deferred income 239 111 193 37
Other payables 8 - 5 -
627 136 515 27
Sabien Technology Limited is party to 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. The balance outstanding on the invoice
financing agreement is GBPnil (2019: GBPnil).
19. Borrowings
2020 2019 2020 2019
Group Group Company Company
GBP'000 GBP'000 GBP'000 GBP'000
Borrowings 181 - - -
181 - - -
20. Share capital
2020 2019
GBP'000 GBP'000
Allotted, called up and fully paid
1,453,673,157 Ordinary shares of 0.01p each
(2019: 890,254,867) 146 89
44,004,867 Deferred shares of 4.5p each
(2019: 44,004,867) 1,980 1,980
190,254,867 New Deferred shares of 0.49p
each (2019: 190,254,867) 932 932
Total 3,058 3,001
On 12 September 2019, the Company raised GBP326k (gross) by the
issue of 296,751,623 Ordinary shares of 0.01p each at a cash price
of 0.11p per share. Net proceeds after expenses amounted to
GBP291k.
On 9 January 2020, the Company raised GBP300k (gross) by the
issue of 200,000,000 Ordinary shares of 0.01p each at a cash price
of 0.15p per share. Net proceeds after expenses amounted to
GBP287k.
On 23 January 2020, the Company raised GBP100k (gross) by the
issue of 66,666,667 Ordinary shares of 0.01p each at a cash price
of 0.15p per share. Net proceeds after expenses amounted to
GBP99k.
Share options (see note 22)
At the year end date, the following options had been
granted:
Date of Grant At 1 July At 30 June Exercise Exercisable Exercisable
2019 2020 price from to
1 April 2010 281,371 - 54.5p April 2013 April 2020
31 October 2014 35,000 35,000 54.5p October 2017 October 2024
Total 316,371 35,000
281,371 share options were cancelled or lapsed in the year under
review.
21. 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) 41 - 41 - - -
41 - 41 - - -
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 627 - 627 515 - 515
Borrowings 181 - 181 - - -
808 - 808 515 - 515
22. 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 20 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:
2020 2019
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 (2019: GBPnil)
arising from the share based payments noted above in profit and
loss for the year ended 30 June 2020.
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
2020 exercise price 2019 exercise price
2020 2019
Balance at
beginning of
the financial
year 316,371 53.70 422,437 53.70
Granted during
the year - - - -
Cancelled during
the year (281,371) - (106,066) -
Balance at end
of the financial
year 35,000 54.00 316,371 54.00
Weighted average
remaining
contractual life 4.34 years - 1.26 years -
23. 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 Richard Parris,
Charles Goodfellow, Cédriane de Boucaud Truell and Marco Nijhof
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 analysed in the
Remuneration Report.
2020 2019
GBP'000 GBP'000
The aggregate remuneration compromises:
Aggregate emoluments 120 138
Consultancy fees 204 24
324 162
The remuneration of the highest paid director during the year
was GBP120k (2019: GBP138k). The remuneration of individual
Directors is disclosed 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 GBP58k
(2019: GBP64k) and at the year end the amounts due to Peterhouse
Capital Limited were GBP8k (2019: GBPnil).
During the year, the Company charged its subsidiary, Sabien
Technology Limited, GBP50k (2019: GBP53k) by way of management
charges. Sabien Technology Limited repaid GBP564k (2019: GBP219k)
during the year in respect of working capital loans and at the year
end the amount outstanding, excluding a provision of GBPnil (2019:
GBPnil) charged in the year, was GBP50k (2019: GBP41k).
24. Subsequent events
Acquisition of Ptarmigan Health Destinations SA (PHD)
Sabien signed a Sale and Purchase agreement to acquire the whole
issued share capital of PHD in October 2020 (the Acquisition). PHD
is a health destination company based in the valley of Evolene, in
the Canton of Valais, Switzerland and has as major shareholders
Pension Superfund Private Markets and Disruptive Capital
Investments II Limited. Pension Superfund Private Markets and
Disruptive Capital Investments II Limited are connected parties to
the Truell Inter-Generational FLP, 25% shareholders in Sabien.
The Acquisition, subject to re-admission to trading of Sabien's
shares, would be classified as a reverse takeover in accordance
with the AIM Rules for Companies ("AIM Rules") and will require
approval by Sabien shareholders at a general meeting. On
completion, the Company, as enlarged by the Acquisition, would be
renamed Health Destinations plc.
The structure of the Acquisition, which remains subject to
shareholder approval, is that Sabien would acquire PHD for a
consideration of approximately GBP44.48m to be satisfied by the
issue of ordinary shares in Sabien to the vendors of PHD at an
issue price of 325 pence per share (following a proposed 1,000:1
Share Consolidation). This would result in the issue of
approximately 13.63m new ordinary shares in Sabien.
In the event that the re-admission to trading of Sabien's shares
is unsuccessful, Sabien retains the right to acquire PHD on the
same terms, but this would require Sabien to withdraw from the AIM
Market of London Stock Exchange Plc subject to shareholder
approval.
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END
FR FFAFUAESSEFF
(END) Dow Jones Newswires
November 19, 2020 02:00 ET (07:00 GMT)
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