Trading Update

RNS Number : 0478S

Sabien Technology Group PLC

06 July 2020

 

6 July 2020

Sabien Technology Group plc

("Sabien" or the "Company")

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 doubled in the second half of the financial year compared to the first half. This brings total sales (unaudited) for the year to approximately £460,000 (FY19: £1,379,000).  The decrease in full year sales, while disappointing, is explained by last year's revenues including an exceptional order of £846,375 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 has increased to £777,848 at 30 June 2020 (30 June 2019: £738,000; 30 June 2018: £9,000). This includes a Covid business interruption loan of £181,000 from NatWest Bank received on 25 June.

While Covid uncertainty has 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 has been restructured with the departure of the Alan O'Brien, CEO, (announced 5/11/19) and David Bakst, Managing Director (announced (29/5/20). Until further notice these functions will filled by Executive Chairman, Richard Parris.  These changes will contribute an annual saving on the operating company payroll of more than £200,000 from 1 June 2020.

· The Board placed 85% of the workforce on Covid-19 furlough from 31 March 2020. This has 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 to have been undertaken to the extent possible using non-furloughed staff.

The Company has recently started a development project to "cloud enable" its existing M2G user base (up to circa 10,500 units). 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. Early revenues from this new Cloud service are expected before the end of 2020.

Operationally, Sabien is planning a strong start to the new financial period with a backlog of more than 300 M2G units to install and a confirmed order book of approximately £140,000.  Commencing 16 June 2020, staff are being phased back from furlough leave to enable the Company to start to install backlogged units. The limiting factor is regaining access to customer sites which have been in lockdown since March. It is likely that full operations will restored within 3 months, with a new look business focused increasingly on indirect selling through channel partners in the UK and the US.

Richard Parris, Chairman, said: "The Sabien operating business is entering the new financial year in good shape to deliver year-on-year growth, relative to FY2020. This is a direct result of the Board's restructuring of the management and sales teams. During FY2021 and beyond we are expecting a sales bounce from (1) a post-Covid investment focus on green technology and (2) recessionary sentiments across the economy that will place a immediate customer emphasis on cost reduction programmes with short payback windows. I believe Sabien is now well placed to benefit from both of these macro trends and, in conjunction with our cost control measures, the Company is in a strong position for a return to profitability. The Board thanks Sabien staff for their support and forbearance during the difficult time of furlough and we look forward to welcoming you back over the coming weeks."

For further information:

Sabien Technology Group plc  Richard Parris, Chairman  SPARK Advisory Partners Limited (Nominated Adviser) Neil Baldwin / Matt Davis  Peterhouse Capital Limited (Broker) Duncan Vasey/ Lucy Williams	[phone] [phone]  [phone]
A copy of this announcement will be available from the Company's website at www.sabien-tech.co.uk

 

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