Audited Annual Report

Company Statement of Changes in Equity

For the year ended 30 June 2017

 

	Share capital	Share premium	Share based payment reserve	Retained earnings	Total equity
	£'000	£'000	£'000	£'000	£'000
Balance at 1 July 2015	1,650	22	165	2,726	4,563
Changes in equity for year
Loss for the year	-	-	-	(113)	(113)
Share issue	550	143	-	-	693
Employee share option scheme - value of services provided	-	-	3	-	3
Balance at 30 June 2016	2,200	165	168	2,613	5,146
Changes in equity for year
Loss for the year	-	-	-	(2,632)	(2,632)
Share issue	331	816	-	-	1,147
Employee share option scheme - value of services provided	-	-	1	-	1
Transfer to retained earnings re lapsed options	-	-	(70)	70	-
Balance at 30 June 2017	2,531	981	99	51	3,662

 

 

 

 

 

 

 

 

 

 

The notes on pages 29 to 46 form part of these financial statements.

Notes to the Consolidated Financial Statements

For the year ended 30 June 2017

 

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 of the Group. The consolidated information comprises the Company and its subsidiaries (together referred to as "the Group").

 

a)         Basis of preparation: The financial information in this document has been prepared using accounting principles generally accepted under International Financial Reporting Standards ("IFRS"), as adopted by the European Union.

 

The Directors expect to apply these accounting policies, which are consistent with International Financial Reporting Standards, in the Group's Annual Report and Financial Statements for all future reporting periods.

 

The Directors believe that, despite the losses incurred in the past two years and the uncertainty as to the timing of future profitability, the Group is a going concern and have accordingly prepared these financial statements on a going concern basis.

 

The key performance indicator for the Group is the conversion of its sales pipeline to revenue. The pipeline comprises business cases submitted to clients. The conversion of opening pipeline to sales revenue in the year amounted to 2.66% which was a significant reduction on previous years' conversion rates. This was the result of the withdrawal of a number of large prospects from the opening pipeline and a reduction in contract value of a number of sales. The Board is of the opinion that this rate was an anomaly which would not reoccur in future periods. However, even if this conversion rate were to be applied to the sales pipeline at 30 June 2017, cashflow forecasts prepared by the Directors confirm that the Group will have sufficient working capital to settle its liabilities as they fall due for a period of not less than 12 months from the date of the approval of these financial statements.

 

The consolidated financial statements have been prepared on the historical cost basis and are presented in £'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 loans and receivables 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.

 

Loans and receivables 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 year end date. These are classified as non-current assets.

 

Trade receivables are classified as loans and receivables 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. Provision is made when there is objective guidance that the Group will not be able to recover balances in full. Balances are written off when the probability of recovery is assessed as being remote.

 

The Group's financial assets are disclosed in notes 14 and 15. Impairment testing of trade receivables is described in note 15.

 

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 17.

 

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 from sale of goods is recognised upon delivery and installation at a customer site or delivery to a customer's incumbent facilities manager which subsequently carries out the installation itself. 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 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: Rentals applicable to operating leases where substantially all of the benefits and risks of ownership remain with the lessor are charged to profit and loss on the straight line basis over the lease term.

 

m)        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.

 

n)         Accounting basis and standards

These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.

 

During the year ended 30 June 2017 the Group adopted a number of new IFRS standards, interpretations, amendments and improvements to existing standards. These new standards and changes did not have any material impact on the Company's financial statements.

 

The following IFRS and IFRIC Interpretations have been issued but have not been applied by the Group in preparing these financial statements as they are not as yet effective and in some cases had not yet been adopted by the EU. The Company intends to adopt these Standards and Interpretations when they become effective, rather than adopt them early.

 

IFRS 9, 'Financial Instruments'

IFRS 15, 'Revenue from Contracts with Customers'

IFRS 16 'Leases'

IFRS 10 and IAS 28 (amendments), 'Sale or Contribution of Assets between an Investor and its Associate or Joint Venture'

Amendments to IFRS 2, 'Classification and Measurement of Share-based Payment Transactions'

Amendments to IAS 7, 'Disclosure Initiative'

Amendments to IAS 12, 'Recognition of Deferred Tax Assets for Unrealised Losses'

 

The directors do not expect that the adoption of the Standards listed above will have a material impact on the Group in future periods except that IFRS 9 will impact both the measurement and disclosure of financial instruments and IFRS 15 may have an impact on revenue recognition and related disclosures. Beyond this, it is not practicable to provide a reasonable estimate of the effect of IFRS 9 and IFRS 15 until a detailed review has been completed. 

 

IFRS 16 is a significant change to leasee accounting and all leases will require balance sheet recognition of a liability and a right-of-use asset except short term leases and leases of low value assets. The effect on the Group in the future cannot be accurately quantified at this stage.

 

A number of IFRS and IFRIC interpretations are also currently in issue which are not relevant for the Group's activities and which have not therefore been adopted in preparing these financial statements.

 

 

2.         Financial risk management

 

Financial Risk Factors

The Group's activities expose it to a variety of financial risks arising from its use of financial instruments: credit risk, liquidity risk and market risk. This note describes the Group's objectives, policies and processes for managing those risks and the methods used to measure them.

 

Further quantitative information in respect of these risks is presented throughout these financial statements. So far, there have been no substantive changes in the Group's exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous periods unless otherwise stated in this note.

 

The principal financial instruments used by the Group, from which the financial instrument risk arises, are as follows:

• trade and other receivables

• cash and cash equivalents

• trade and other payables

 

The Board has overall responsibility for the determination of the Group's risk management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Group's finance function. The Board reviews regular finance reports from the Finance Director through which it evaluates any risk exposures with a view to minimising any potential adverse effects on the Group's financial performance. So far, the Group has not used derivative financial instruments to hedge risk exposures as its activities and operations exposure to such risks are not deemed significant. Transactions that are speculative in nature are expressly forbidden.

 

 

 

 

 

 

 

Details regarding the policies that address financial risk are set out below:

 

(i)   Credit Risk

 

Credit risk arises principally from the Group's trade receivables and cash and cash equivalents. It is the risk that the counterparty fails to discharge its obligation in respect of the instruments.

 

 

Trade Receivables

The nature of the Group's operations means that all of its current key customers are established businesses and organisations in both the public and private sector. The credit risks are minimised due to the nature of these customers and the concentration of sales to date within established economies. The Group will continually review its credit risk policy, taking particular account of future exposure to developing markets and associated changes in the credit risk profile.

 

The carrying amount in the Consolidated Statement of Financial Position, net of any applicable provisions for loss, represents the amount exposed to credit risk and hence there is no difference between the carrying amount and the maximum credit risk exposure.

 

(ii)   Liquidity Risk

 

Liquidity risk arises from the Group's management of working capital. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due.

 

The Group's policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due and have the availability of such funds for its operations. Management monitors rolling forecasts of the Group's liquidity reserve which comprises cash and cash equivalents on the basis of expected cash flow. At the year end date, these projections indicate that the Group expects to have sufficient liquid resources to meet its obligations under all reasonable expected circumstances for the forthcoming year. The Group continues to monitor its liquidity position through budgetary procedures and cash flow analysis.

 

The table below analyses the Group's financial liabilities into relevant maturity groupings based on the remaining period from the year end date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due in less than 1 year equal their carrying balances as the impact of discounting is not significant.

 

 

	Less than 1 year	Between 1 and 2 years	Between 2 and 5 years	Over 5 years
At 30 June 2017	£'000	£'000	£'000	£'000
Trade and other payables	156	-	-	-
At 30 June 2016
Trade and other payables	216	-	-	-

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 decrease in the average interest rate during the year would have resulted in an increase in post-tax loss for the year of £1k (2016: £1k).

 

·     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 2017 Euro and US dollar exchange rates would have increased the Group's loss after tax by less than £1k (2016: £1k).

 

·     Other Price Risk

 

The Group does not hold external investments in equity securities and therefore is not exposed to other price risk.

 

Capital risk management

 

The Group's objective when managing capital is to safeguard the Group's ability to continue as a going concern in order to provide future returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. The Group seeks to maintain, at this stage of its development, sufficient funding drawn primarily from equity to enable the Group to meet its working and strategic needs. The Group may issue new shares or realise value from its existing investments and other assets as may be deemed necessary.

 

The Group centrally manages borrowings, investment of surplus funds and financial risks. The objective of holding financial investments is to provide efficient cash and tax management and effective funding for the Group.

 

Fair value estimation

 

Holding trade receivables and payables at book value less impairment provision is deemed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments.

 

3.         Critical accounting estimates and judgements

 

Sources of Estimation Uncertainty

The preparation of the consolidated and company financial statements requires the Group and Company to make estimates, judgements and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. The directors base their estimates on historical experience and various other assumptions that they believe are reasonable under the circumstances, the results of which form the basis for making judgements about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

 

In the process of applying the Group's and Company's accounting policies, management has made a number of judgements and estimations, of which the following are deemed to have the most significant effect on amounts recognised in the financial statements:

 

(i) Revenue Recognition

No significant criteria are required by the Group in regard to revenue recognition that are not covered by the accounting policy.

 

(ii) Share-based Payments

The calculation of the estimated fair value of share options and warrants granted can only reasonably be assessed once such options and warrants are exercised. To date, no options or warrants have been exercised and the Group is therefore reliant upon the calculations as explained in the accounting policy and note 20 to the accounts in arriving at an estimated fair value in line with the requirements of IFRS2.

 

(iii) Going Concern

The key performance indicator for the Group is the conversion of its sales pipeline to revenue.  The pipeline comprises business cases submitted to clients.  The conversion of opening pipeline to sales revenue in the year amounted to 2.66% which was a significant reduction on the historical conversion rates.  This was the result of the prolonged discussions with a number of large prospects.

 

Following the reduction in sales revenue the Group incurred a loss for the year of £1,621,000 and at the year end had cash reserves of £26,000.  These conditions indicate the existence of a material uncertainty in respect of going concern.  However, the directors are taking steps to address the uncertainty and which they expect will ultimately return the Group to profitability as set out below.

 

The Group continues to have substantive discussions with a number of parties who have received the P35 and P40 pilot reports.  The Board is of the opinion that a number of these discussions will result in significant sales revenue.

 

In addition, the Board has significantly reduced the Group's cost base and improved the business model to develop a more predictable revenue stream.  The Group has launched a new rental option for the M2G.  The Group has received significant interest in this proposition and has now received notification of its first significant rental contract.   

 

The Group is planning to undertake a further fundraising to improve the Group's working capital position and has received confirmation from the Company's Chairman, an existing large shareholder, that he will support the fund raise and subscribe for £100,000. This shareholder has also agreed to advance his subscription with no interest cost to support the Group until the fundraising is complete.

 

The cashflow forecasts based on the above prepared by the Directors confirm that the Group will have sufficient working capital to settle its liabilities as they fall due for a period of not less than 12 months from the date of the approval of these financial statements. Consequently, the financial statements have been prepared on a going concern basis.

 

(iv) Impairment of Assets

In line with the going concern assumption, based on their best estimate of likely future developments within the business, the directors consider that an impairment provision against the carrying value of Investment in Subsidiaries is required in the Company's Statement of Financial Position as at the year end date, as detailed in note 13.

 

(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.

 

Given the loss for the year and the likelihood of the Company not returning to profitability in the current financial year, no deferred tax asset will be recognised in the financial statements for the year under review.

 

The tax losses available to offset against future taxable profits, subject to HMRC agreement, are estimated at £5.18m.

 

(vi)  Intellectual Property

As a result of a review by the Directors of the unit sales likely to arise over the next year, no change in the value of Intellectual Property has been deemed to be necessary and consequently no provision has been made for impairment.   

 

 

4.         Segmental reporting

 

Based on risks and returns, the Directors consider that the primary reporting business format is by business segment which is currently just the supply of energy efficiency products, as this forms the basis of internal reports that are regularly reviewed by the Group's chief operating decision maker in order to allocate resources to the segment and assess its performance. Therefore the disclosures for the primary segment have already been given in these financial statements. The secondary reporting format is by geographical analysis by destination. Non-UK revenues amounted to 40% of the total and are analysed as follows:

 

Geographical information	Year ended 30 June 2017		Year ended 30 June 2016
	Sales revenue	% of total revenue	Sales revenue	% of total revenue
	£'000		£'000
UK	305	60	775	88
Other	204	40	104	12
Total	509	100	879	100

 

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

 

	Sales revenue	% of total revenue
	£'000
Customer 1	103	20
Customer 2	91	18
Customer 3	74	15
Customer 4	70	14
Customer 5	65	13

 

          5.         Operating loss

 

 

Operating loss is stated after charging/(crediting):

	Year ended 30 June 2017	Year ended 30 June 2016
	£'000	£'000
Depreciation of property, plant & equipment	60	64
Amortisation of intangible assets Profit on disposal of property, plant and equipment	47                     (3)	47 -
Operating lease rentals - land and buildings	54	56
Profit on foreign exchange	-	(3)
Cost of inventories recognised as an expense	131	177

 

 

 

          6.         Investment revenue

	Year ended 30 June 2017	Year ended 30 June 2016
	£'000	£'000
Interest receivable	3	2

 

7.         Auditors' remuneration

	Year ended 30 June 2017	Year ended 30 June 2016
	£'000	£'000
Fees payable to the Company's auditors for:
- the audit of the Company's annual accounts	10	10
Fees payable to the Company's auditors for other services to the Group:
- the audit of the Company's subsidiary	18	16
Total audit fees	28	26
Fees payable to the Company's auditors for:
- taxation compliance services	5	4
- other services	5	2
Total other fees	10	6

 

 

8.         Staff costs

	Year ended 30 June 2017	Year ended 30 June 2016
	£'000	£'000
Wages and salaries	1,199	1,180
Social security costs	129	135
	1,328	1,315

 

 

The average monthly number of employees, including directors, during the year was as follows:

 

	Year ended 30 June 2017	Year ended 30 June 2016
	Nos.	Nos.
Directors	5	5
Administration	18	18
	23	23

 

 

9.         Corporation tax

 

	Year ended 30 June 2017	Year ended 30 June 2016
	£'000	£'000
Current tax	30	-
Total tax credit for the year	30	-
Loss before tax	(1,651)	(1,620)
Tax on loss on ordinary activities at standard UK corporation tax rate of 20% (2016: 20%)	(330)	(324)
Expenses not deductible for tax purposes	1	1
Depreciation in excess of capital allowances	11	(9)
Tax losses carried forward	318	332
Current tax	-	-

 

The tax credit represents the receipt of tax credits on qualifying R&D expenditure.

 

 

 

 

Deferred tax:

 

As detailed in note 3 (v) above, 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 £5,181k (2016: £3,687k) which at the standard tax rate would equate to £1,036k (2016: £660k).

 

 

10.        Earnings per share

 

The calculation of earnings per share is based on the loss for the year attributable to equity holders of £1,621k (2016: £1,620k loss) and a weighted average number of shares in issue during the period of 71,504,867 (2016: 43,088,200).  At the year end, options over 557,437 shares (2016: 2,145,667) were in issue but have not been taken into account in calculating diluted earnings per share as they are anti dilutive.

 

 

11.        Property, plant and equipment

 

Group	2017	2016
	£'000	£'000
Cost
At 1 July	313	206
Additions	1	117
Disposals	(25)	(10)
At 30 June	289	313
Depreciation
At 1 July	192	138
Charge for the year	60	64
Reversed on disposals	(22)	(10)
At 30 June	230	192
Net Book Value
At 30 June 2017	59	121
At 30 June 2016	121	68

 

The Company held no property, plant and equipment at 30 June 2017 and 2016.

  

 

12.        Intangible assets

 

Group	2017	2016
	£'000	£'000
Intellectual Property
Cost
At 1 July and 30 June	943	943
Amortisation
At 1 July	482	435
Charge for the year	47	47
At 30 June	529	482
Net Book Value
At 30 June 2017	414	461
At 30 June 2016	461	508

 

Intellectual Property represents the rights to the M2G product acquired from the inventors. As a result of an impairment review performed in accordance with IAS 36 'Impairment of Assets' as detailed in note 13, no adjustment to the carrying value is proposed this year.

 

The remaining amortisation period for Intellectual Property is 9 years. The Company held no intangible assets at 30 June 2017 and 2016.

 

13.        Investment in subsidiaries

 

Company	2017	2016
	£'000	£'000
Cost
At 1 July	4,904	3,601
Additions	1,220	1,303
At 30 June	6,124	4,904
Impairment provision
At 1 July	-	-
Charge for year	(2,523)	-
At 30 June	(2,523)	-
Net Book Value
At 30 June 2017	3,601	4,904
At 30 June 2016	4,904	3,601

 

Details of the subsidiary undertakings at the year end date are as follows:

 

Name of company	Country of incorporation	Class of share	Nature of business	Proportion of voting rights
Sabien Technology Limited	England & Wales	Ordinary	Managing carbon through energy reduction	100%
Sabien Technology IP Limited	Northern Ireland	Ordinary	Ownership of Intellectual Property	100%

On 29 June 2017, Sabien Technology Limited issued 1 Ordinary share at £1,220k to the Company.

 

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% (2016: 9.6%) applied to the cash flow projections is derived from the Group's weighted average cost of capital. An average growth rate of 8% (rental revenue growth rate 156%) (2016: 75%) has been applied over the ten years of the cash flow forecast. The consequence is that the value in use falls below the carrying value resulting in an impairment of £2.523m.

 

 

14.        Inventories

 

Group	2017	2016
	£'000	£'000
Goods held for resale	133	221
The Company held no inventories at 30 June 2017 and 2016.

 

 

15.        Trade and other receivables

 

	2017	2016	2017	2016
	Group	Group	Company	Company
	£'000	£'000	£'000	£'000
Trade receivables	21	130	-	-
Other receivables	61	79	6	9
Amounts owed by group undertakings	-	-	63	60
	82	209	69	69

 

The value of trade receivables quoted in the table above also represents the fair value of these items and are due within one year.

 

 

Trade receivables are considered impaired if they are not considered recoverable. As at 30 June 2017, the Group had no receivables which were considered to be impaired and against which a full provision has been made. Trade receivables of £1k (2016: £nil) were past due but not impaired. The ageing analysis of these trade receivables is as follows:

 

	2017	2016
	£'000	£'000
Up to 3 months	20	130
3 to 6 months	1	-
More than 6 months	-	-
	21	130

 

 

 

The carrying amounts of the Group's trade and other receivables are denominated in the following currencies:

	2017	2016
	£'000	£'000
Pounds sterling	66	200
Euros	16	9
	82	209

 

 

 

 

16.        Cash and cash equivalents

 

	2017	2016	2017	2016
	Group	Group	Company	Company
	£'000	£'000	£'000	£'000
Cash and cash equivalents	26	235	14	215

 

 

 

17.        Trade and other payables

 

	2017	2016	2017	2016
	Group	Group	Company	Company
	£'000	£'000	£'000	£'000
Trade payables	39	49	3	10
Social security and other taxation	17	27	(11)	(10)
Accruals and deferred income	100	140	30	42
	156	216	22	42

 

18.        Share capital

	2017	2016
	£'000	£'000
Allotted, called up and fully paid
110,254,867 New Ordinary shares of 0.5p each (2016: nil )	551	-
Ordinary shares of 5p (2016: 44,004,867)	-	2,200
44,004,867 Deferred shares of 4.5p each  (2016: nil )	1,980	-
Total	2,531	2,200

 

At a general meeting of the Company held on 13 July 2016, the Ordinary shares of 5p each were split into 44,004,867 New Ordinary shares of 0.5p each and 44,004,867 Deferred shares of 4.5p each. The Deferred shares have no right to receive notice of attendance or vote at any general meetings of the company and no right to receive any dividend or other distribution.

 

On 16 September 2016, the Company raised £750k (gross) by the issue of 18,750,000 New Ordinary shares of 0.5p each at a price of 4p per share. Net proceeds after expenses amounted to £704k.

 

On 19 April 2017, the Company raised £475k (gross) by the issue of 47,500,000 New Ordinary shares of 0.5p each at a price of 1p per share. Net proceeds after expenses amounted to £443k. 

 

Share options (see note 20)

 

At the year end date, the following options had been granted:

 

Date of Grant	At 1 July 2016 and 30 June 2017	Exercise price	Exercisable from	Exercisable to
12 October 2007	100,000	50.0p	October 2010	October 2017
1 April 2010	330,694	54.5p	April 2013	April 2020
25 November 2010	91,743	54.5p	November 2013	November 2020
31 October 2014	35,000	54.5p	October 2017	October 2024
Total	557,437

 

1,588,230 share options were cancelled or lapsed in the year under review.

 

 

19.        Operating lease commitments

 

At the year end date, the Group had the following total commitments under non-cancellable operating leases:

 

Group	Land & buildings
	2017	2016
	£'000	£'000
Expiry date:
Within one year	60	60
Between two and five years	30	149
	90	209

 

The Company had no commitments under non-cancellable operating leases at 30 June 2017 and 2016.

 

 

20.        Share based payments

 

The Company has issued share options under a share option scheme for directors and employees set up in November 2006 under which approved and unapproved share options were granted prior to the flotation of the Company in December 2006. The Company adopted the "Sabien Technology Group Share Option Plan" at the time of flotation and it is intended that options will only be granted under this scheme in future.

 

Under this scheme, directors and employees hold options to subscribe for 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 18 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:

	2017	2016
Share price at date of grant	-	39.0p
Exercise price at date of grant	54.5p	54.5p
Weighted average fair value	-	5p
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 £1k (2016: £3k) arising from the share based payments noted above in profit and loss for the year ended 30 June 2017 and this has been credited to Other Reserves in the Consolidated and Company Statements of Financial Position.

 

The following reconciles the outstanding share options granted under the employee share option scheme at the beginning and end of the financial year:

 

 

	Number 2017	Weighted average exercise price 2017	Number 2016	Weighted average exercise price 2016
Balance at beginning of the financial year	2,145,667	52.98	2,272,410	52.98p
Granted during the year	-	-	-	-
Cancelled during the year	(1,588,230)	-	(126,743)	-
Balance at end of the financial year	557,437	53.70	2,145,667	52.98p
Weighted average remaining contractual life	2.7 years	-	2.1 years	-

 

 

 

21.        Related party transactions

 

Key management personnel are those persons having authority and responsibility for planning, controlling and directing the activities of the Group. In the opinion of the Board, the Group's key management personnel are the Directors of Sabien Technology Group Plc.  Information regarding their remuneration is given in the Remuneration Report. The Company has entered into service agreements with Karl Monaghan, Dr Martin Blake and Bruce Gordon with entities either controlled by them or in which they have an interest as shareholders. Fees are paid in accordance with those agreements.

 

 

During the year, Sabien Technology Limited was charged £102k (2016: £106k) by way of management charges by Sabien Technology Group Plc, its parent company. Sabien Technology Limited repaid £99k during the year in respect of these working capital loans and at the year end the amount outstanding was £63k (2016: £60k).

 

At the year end, the Group was owed £nil (2016: £1k) by Gus Orchard, a Director of the Company in the year, in respect of a season ticket loan.

 

ENDS