Preliminary Statement of Final Results

RNS Number : 5185N

Sabien Technology Group PLC

01 October 2012

 



1 October 2012

Sabien Technology Group Plc

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

Preliminary results for the year to 30 June 2012

Sabien Technology Group Plc, the manufacturer and supplier of M2G, a boiler energy efficiency technology, is pleased to report its preliminary results for the year to 30 June 2012.

Sabien Technology Group highlights 2012

·      Sales for the year up 18% to £2.47m (2011: £2.09m)

·      Pre-tax profits up 47% to £0.28m (2011: £0.19m)

·      Contract wins in the 12 months included:

Monteray-British Telecom, Romec-Royal Mail, Edmundson Electrical-Glasgow City Council, SSE Contracting-Glasgow City Council, EDF Energy, Greenwich University, Regus, Sustainability Plus-BNP Paribas, Standard Life, Schneider Electric-University of Swansea, Southwark Council, Ministry of Justice and Vinci Facilities

·      Sales from Alliance Partners increased to £1.06m (2011: £0.38m)

·      Net cash balance at 30 June 2012 was £1.40m (2011: £1.03m)

·      Sales pipeline of £9.1m at 30 June 2012 (2011: £7.7m)

·      Sabien appointed preferred partner to the Carbon Disclosure Program (CDP)

Highlights since the year end

·      Sales orders received since 1 July 2012 total £0.65m. Sales pipeline currently standing at c.£8.7m which includes over 80 blue chip private and public sector multi-site organisations

·      The Group continues to participate in and track a number of significant public sector tender opportunities which, if awarded, are expected to produce revenues in excess of our recent annual turnover. However the exact timings of orders and the resultant cash flows are not certain at this time

For further information:

Sabien Technology Group plc

Alan O'Brien, CEO                                                           Tel: [phone]

Gus Orchard, CFO                                                          www.sabien-tech.co.uk

Westhouse Securities                                                     Tel: [phone]

Antonio Bossi

Petre Norton

About Sabien Technology

Founded in March 2004 by Alan O'Brien, UK-based Sabien Technology specialises in providing proven and commercially viable technology to reduce carbon emissions and energy usage for private and public organisations. Sabien Technology Group Plc floated on AIM in 2006.

The M2G is a patented energy efficient technology designed to reduce fuel consumption in commercial boilers. M2G dynamically responds to changing load demand by measuring, identifying and removing dry cycling thus maximising efficiency under all conditions.

M2G can be retro-fitted and fully integrates and complements existing controls, such as BMS, boiler sequencing, weather compensation and building optimisation controls. Using intelligent software and hardware, the M2G unit improves a boiler's efficiency by reducing energy wastage. For further information, please visit our website www.sabien-tech.co.uk.

Introduction

For the period under review and subsequent to it, Sabien has continued to make good progress in delivering new sales, developing its sales pipeline and establishing a reputation as a proven and trusted green technology provider in the UK.

History and market development

Sabien was set up in 2004 to commercialise M2G, a boiler energy efficiency technology, which reduces gas and oil consumption in commercial boilers. In May 2006, Sabien acquired the Intellectual Property and all commercial rights to M2G and floated on AIM in December 2006. In March 2009, Sabien obtained Underwriters Laboratories (UL) certification which enabled M2G to be sold in the USA.

The demand for energy efficient products is still growing, driven increasingly by regulation as well as the need to cut the ever increasing cost of fuels. In the UK, the government's CRC Energy Efficiency Scheme requires larger companies to purchase CO₂ credits according to how much CO₂ they produce and is designed to encourage a proactive approach to reducing CO₂ emissions.

Financial results

Revenue in the year was £2.47m compared with £2.09m for the same period last year. The profit before taxation was £0.28m (2011: £0.19m) and profit after taxation was £0.52m (2011: £0.23m). The increase in profit after taxation is due to the recognition of a deferred tax asset of £0.24m (2011: £0.04m) in respect of available tax losses.

At 30 June 2012, cash and cash deposits amounted to £1.40m (2010: £1.03m).

Overview

In 2011/12 Sabien performed well, with revenue increasing by 18%. This demonstrates that, in a tough environment, our customers continue to recognise the outstanding quality of our M2G technology offering, project management and installation service offerings. Profit before tax increased by 43% which is indicative of the Group's operational efficiency and consistent pricing model.

To date, we have built a first-class business, predicated on a sound underlying business model and our core values. We are passionate about everything we do, striving to be the best in the world and aiming to deliver the best possible technology offering and service delivery to our customers, resulting in maximising returns for our shareholders.

The key to our on-going strategy and future lie in our aims to:

·      Continue to focus on multi-site organisations irrespective of SIC code and or industry type

·      Optimise our existing and new client sales potential by continuing to increase the level of M2G (post installation) validation information from as many relevant sources as possible

·      Continue improving our levels of customer service and technical support to help our customers get the best business case results they need from their M2G roll out programs

·      Maintain and expand our network of excellent alliance partners

·      Begin to identify opportunities to add new products which will enter adjacent segments of the market

·      Continue to attract new customers; and

·      Extend our geographic penetration.

We are pleased with our performance this year and continued profitability. Our pipeline continues to grow and we believe the continued uplift in both public and private sector contract awards will ensure ever-increasing profitability. The progress is in large part due to the successful conversion of our Project 10 (P10) M2G pilots, which we have carried out over the last few years, into commercial orders and in many cases further repeat orders. Our progress has also been augmented by the broadening of our UK Alliance Partner programme which again has proved very successful with orders being placed throughout the year.

The CRC (CRC Energy Efficiency Scheme - formerly the Carbon Reduction Commitment) in the UK, published its first league table in November 2011. The scheme continues to be a key focus for our clients as they mitigate the costs of the CRC. The Department of Energy and Climate Change (DECC) is currently simplifying the scheme, the objective of the simplification being to optimise the projected energy and carbon savings delivered by the CRC and to dramatically reduce the complexity so that energy efficiency and carbon savings are delivered at the minimum administrative cost.

The focus on reducing energy costs and ever increasing commitments to reduce carbon emissions are driving the interest and demand for M2G from public and private sector organisations. Sabien's M2G product is specifically aimed at providing a proven effective solution to the CRC problem for organisations which are affected by the CRC legislation. M2G reduces the cost of running gas and oil fired boilers and the associated carbon emissions by up to 35%.

During the year, 44% of Sabien's revenue came from the public sector and this is expected to remain a substantial percentage in the future despite the pressures being put on public sector finances. The public sector financing review is focused on driving efficiencies and reducing operating costs to include energy consumption and CO₂ emissions. Sabien's M2G offers a quick and cost effective solution to their energy efficiency problems and public sector organisations have benefited from Salix funding which offers them a route to finance the capital cost of their energy efficiency programmes. Our public sector M2G sales pipeline includes a number of entities which have already received Salix funding approval.

In the Group's interim report, we said that growth from our existing business in the form of repeat orders had created a solid platform for the year and that the Group was well positioned to take advantage of market opportunities as and when they appeared. This continues to be the case and is borne out by the continuing healthy order book and prospect list.

Strategy

We continued to make good progress on our strategy during the year which is to become a technology supplier of choice for private and public sector organisations that are faced with delivering on their energy and carbon reduction strategies. 

Our strategic priorities are to build on our core business, to capitalise on the opportunities from existing client business, identify new business and continue to develop our indirect sales channels and where appropriate, expand our current territories and also enter new territories.

Project 10 (P10 - M2G piloting)

P10 is a scheme, initiated in 2007, whereby we agree to install M2Gs at up to 3 sites in each of a number of large prospective customers, paid for by the client, and to monitor the results for a defined period, usually 4 weeks. At the conclusion of the pilot period, a report is produced for each customer in which the results of the pilot are presented along with an estimate of the likely levels of savings in energy and CO₂ emissions were M2G to be deployed over the customer's estate.  

P10 is still available and very much part of our on-going new contract generation strategy and as the business continues to grow, many initial P10 clients continue to place further orders on us while we are also awarded new contracts as a result of successful new P10 pilots. The business focus has now widened to simultaneously mobilise nationwide M2G contracts and piloting directly with clients and indirectly with companies via our Alliance Partners.  

The Group has seen a noticeable increase in the number of M2G orders from referrals, Alliance Partners and clients that haven't required a pilot. This rise has been aided by an increase in M2G brand awareness, technology acceptance and a reputation for delivering an excellent standard of project management in the industry. 

The successful conversion of our P10 M2G pilots into orders and subsequent repeat orders has proven to be the driving catalyst behind our increase in profitability during this financial year.

Operational progress

During the period under review Sabien continued to develop its Alliance Partner programme with £1.06m of total sales for the period under review coming from indirect sales channels, an increase from £0.38m in 2011.

Orders were received from a number of leading UK Utility and Facility Management Companies including Babcock, Conder M&E, EDF Energy, G4S, Interserve, John Laing, Schneider Electric, SSE Contracting, CBRE, EMCOR, Norland Managed Services and Vinci Facilities.

We continue to participate in trade shows and exhibitions and have generated a large volume of sales prospects from these. Sabien's name continues to be increasingly recognised in the sector of energy efficiency and the number of prospects that contact us directly as a result of client referrals and our marketing efforts has increased materially.

In order to facilitate continued new business growth, we continue to look at ways in which we can improve our internal operations, systems and marketing capabilities. For example this year we invested in our core Customer Management System which will enable us to develop our prospects, improve business reporting and manage the installations of M2G.

Overseas expansion

Europe and the USA: We have a clear plan for the business and we are committed to its execution. The company is beginning to receive meaningful expressions of interest from Clients, Technology Specifiers and Facility Management companies on becoming distributors for M2G in their respective geographical territories. 

The Group has no plans to open points of presence overseas. Our strategy is to appoint reputable companies with proven in-house technical expertise, experienced management with an extensive client portfolio who can make a meaningful contribution to Sabien's financial performance.

Future developments

The Group is focused on growing profitability to provide the resources for future research and development for products such as M3G, an energy efficiency product aimed at the commercial air conditioning market. In order to promote this growth, the Group is currently investing in its sales and engineering resources which should give it more capacity to carry out further R&D activity.

The Group continues to promote its M2G technology via its network of Alliance Partners and through its in-house business development team. Interest levels in M2G from our Alliance Partners' clients is at an all-time high and with new partners joining the programme, sales of M2G via this channel this year are expected to continue to grow.

Board, management and people

Dr Clive Morton will be retiring as chairman of the Company at the next Annual General Meeting, which is to be held in November 2012, and will retire as a non-executive director of the Company as of 30 November 2012. He has made a major contribution to our success and the Board would like to take this opportunity of thanking Dr Morton for his invaluable guidance as chairman of the Board since the Company floated in December 2006 during which time the Group has successfully grown and moved into profit.

We would like to thank our shareholders for their continued support, our fellow directors and all the Company employees whose efforts have contributed to the progress of the Group over the last twelve months. The Board is incredibly proud of the team that is driving the Group forward. This year, the energy and enthusiasm of our staff turned our plans into action and we are already seeing the results of their hard work. Our sincere thanks go to all our employees across the business for what has been another successful year. Their efforts have been crucial to our achievements.

Outlook

The Group has made a good start to the new financial year and since 1 July 2012 has received purchase orders totalling £0.65m, all of which will be recognised as revenue in the first half of the current financial year.

The Board believes the current economic climate will continue to create significant medium and long-term growth opportunities for Sabien, both in the UK and overseas.

Dr Clive Morton OBE                                                                Alan O'Brien

Chairman                                                                                  Chief Executive Officer

Consolidated Statement of Comprehensive Income

For the year ended 30 June 2012

		2012	2011
	Notes	£'000	£'000
Revenue		2,470	2,087
Cost of sales		(753)	(549)
Gross profit		1,717	1,538
Administrative expenses		(1,457)	(1,354)
Operating profit	4	260	184
Investment revenues	5	18	10
Profit before tax		278	194
Tax	6	243	40
Profit for the year attributable to equity holders of the parent company		521	234
Total comprehensive income for the year		521	234
Earnings per share in pence - basic	7	1.6	0.7
Earnings per share in pence - diluted	7	1.5	0.7

The Earnings per share calculation relates to both continuing and total operations.

Consolidated and Company Statement of Financial Position

As at 30 June 2012                                                     Company Reg No: 05568060

		Group		Company
		2012	2011	2012	2011
		£'000	£'000	£'000	£'000
Non-current assets
Property, plant and equipment		38	32	-	-
Intangible assets		650	697	-	-
Investment in subsidiaries		-	-	3,601	587
Total non-current assets		688	729	3,601	587
Current assets
Inventories		292	147	-	-
Trade and other receivables		234	431	55	522
Deferred tax		283	40	-	-
Cash and cash equivalents		1,402	1,033	1,147	786
Total current assets		2,211	1,651	1,202	1,308
Total assets		2,899	2,380	4,803	1,895
Current liabilities
Trade and other payables		156	188	24	27
Total current liabilities		156	188	24	27
Total liabilities		156	188	24	27
Net Assets		2,743	2,192	4,779	1,868
EQUITY
Equity attributable to equity holders of the parent
Share capital		1,574	1,574	1,574	1,574
Other reserves		176	2,797	176	3,568
Retained earnings/(losses)		993	(2,179)	3,029	(3,274)
Total equity		2,743	2,192	4,779	1,868

During the year, both the Company and its trading subsidiary, Sabien Technology Limited, successfully applied to the courts for the cancellation of their respective share premium accounts. The effect of this reduction was to cancel all the accumulated losses both at Group and Company level and, instead, to create positive retained earnings. The merger reserve debit of £771k at group level has now been offset against these retained earnings.

Consolidated and Company Cash Flow Statement

For the year ended 30 June 2012

	Group		Company
	2012	2011	2012	2011
	£'000	£'000	£'000	£'000
Cash flows from operating activities
Profit before taxation	278	194	2,881	256
Adjustments for:
Depreciation and amortisation	61	61	-	-
Decrease in impairment provision	-	-	(3,014)	(371)
Finance income	(18)	(10)	(22)	(28)
Transfers to equity reserves	30	30	30	30
Decrease/(increase) in trade and other receivables	197	(136)	467	24
Increase in inventories	(145)	(19)	-	-
(Decrease)/increase in trade and other payables	(32)	29	(3)	5
Cash generated from/(used in) operations	371	149	339	(84)
Corporation taxes recovered/(paid)	-	-	-	-
Net cash inflow/(outflow) from operating activities	371	149	339	(84)
Cash flows from investing activities
Payment of deferred consideration in respect of acquisition of intellectual property	-	(61)	-	(61)
Purchase of property, plant and equipment	(20)	(30)	-	-
Finance income	18	10	22	28
Net cash (used in)/generated by investing activities	(2)	(81)	22	(33)
Net increase/(decrease) in cash and cash equivalents	369	68	361	(117)
Cash and cash equivalents at the beginning of the year	1,033	965	786	903
Cash and cash equivalents at the end of the year	1,402	1,033	1,147	786

Notes to the Consolidated Financial Statements

For the year ended 30 June 2012

1.   Basis of Preparation:

The results for the year are preliminary and unaudited.

While the financial information included in this interim announcement has been computed in accordance with International Financial Reporting Standards (IFRS), this announcement does not itself contain sufficient information to comply with IFRS.  The full consolidation financial statements of the Company will be prepared in accordance with IFRS, International Accounting Standards and their interpretations issued or adopted by the International Accounting Standards Board as adopted for use in the European Union. 

The directors believe that the Group is a going concern and have accordingly prepared these consolidated financial statements on a going concern basis.

The consolidated financial statements have been prepared on the historical cost basis and are presented in £'000 unless otherwise stated.

2.   Basis of consolidation:

The consolidated Statement of Financial Position and Statement of Comprehensive Income includes the financial statements of the Company and its subsidiaries at 30 June 2012. 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 benefits from its activities.

Business combinations involving entities under common control fall outside the scope of IFRS and are consolidated using merger accounting under which the group incorporates the assets and liabilities of the entities at the amounts recorded in the books of the entities.  No goodwill arises on consolidation and any difference arising from the use of merger accounting is included in equity as a merger reserve.

The consolidated financial information incorporates the combined companies' results as if the companies had always been combined. 

Except as noted above, 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.

3.   Segmental reporting

Based on risks and returns, the directors consider that the primary reporting business format is by business segment which is currently just the supply of energy efficiency products, as this forms the basis of internal reports that are regularly reviewed by the company's chief operating decision maker in order to allocate resources to the segment and assess its performance. Therefore the disclosures for the primary segment have already been given in these financial statements. The secondary reporting format is by geographical analysis by destination. Non-UK revenues amounted to 1% of the total and are analysed as follows:

Geographical information	Sales revenue	% of total revenue
	£'000
UK	2,442	99
Other	28	1
Total	2,470	100

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

	Sales revenue	% of total revenue
	£'000
Customer 1	1,001	41
Customer 2	250	10

4.   Operating profit

The profit before tax is stated after charging:

	Year ended 30 June 2012	Year ended 30 June 2011
	£'000	£'000
Depreciation of owned tangible fixed assets	14	14
Amortisation of intangible assets	47	47
Operating lease rentals - land and buildings	21	24

5.   Investment revenues

	Year ended 30 June 2012	Year ended 30 June 2011
	£'000	£'000
Interest receivable	18	10

6.   Corporation tax

	Year ended 30 June 2012	Year ended 30 June 2011
	£'000	£'000
Current tax	-	-
Deferred tax	243	40
Total tax recovery for the year	243	40
The tax charge for the year can be reconciled to the profit per the Statement of Comprehensive Income as follows:
Profit before tax	278	194
Tax on profit on ordinary activities at standard UK corporation tax rate of [20]% (2011: 20.75%)	56	40
Expenses not deductible for tax purposes	(97)	1
Capital allowances in excess of depreciation	(2)	(3)
Other short term timing differences	93	24
Unrelieved tax losses	10	5
Tax losses utilised	(60)	(67)
Current Tax	-	-

Deferred Tax:

A deferred tax asset has been recognised in respect of £1,416k of available losses brought forward (2011: £194k) as the Directors believe that it is probable that the Group will continue to be sufficiently profitable in the future to be able to utilise these losses. The aggregate amount of deductible temporary differences, unused tax losses and unused tax credits for which no deferred tax asset is recognised in the Statement of Financial Position is estimated at £108k (2011: £1,704k) which at the standard tax rate would equate to £21k (2011: £354k).

7.   Earnings per share

The calculation of earnings per share is based on the profit for the year attributable to equity holders of £521k (2011: £234k) and a weighted average number of shares in issue during the period of 31,486,511 (2011: 31,486,511).  At the year end, warrants for 1,518,356 shares and options over 2,045,670 shares were in issue.  Both have been taken into account in calculating diluted earnings per share.

8.   Share capital

	2012	2011
	£'000	£'000
Allotted, called up and fully paid
31,486,511 Ordinary shares of 5p each (2011 - 31,486,511)	1,574	1,574

Share warrants

On 7 August 2009, the company granted 2,952,279 warrants to TVI 2 Limited, exercisable at 6.6p each over a period of five years. Subsequent to the repayment of the loan to TVI 2 Limited in October 2009, the number of warrants granted was reduced to 1,518,356 and they are now exercisable at a price of 6.42p each. These warrants represent 4.6% of the enlarged share capital including Ordinary shares potentially to be issued under the Warrant instrument.

 

END

 

 

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