- Title:
Final Results & Update on Proposed Acquisition - Time:
07:00:06 - Date:
19 Nov 2020 - Category:
Results - ID:
7978F
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 £1.90 (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 £9,141,204, before any IP, operational or property revaluation were taken into account. PHD generated a loss after tax of £460,945, 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 £44.48 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 Richard Parris, Chairman
|
+44 20 7993 3700
|
| Allenby Capital Limited (Nominated Adviser) John Depasquale / Asha Chotai
|
+44 203 328 5656 |
| Peterhouse Capital Limited (Broker) Duncan Vasey/ Lucy Williams
|
+44 207 469 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.
· Sales for the year £0.45m (2019: £1.38m)
· Loss before tax £1.41m (2019: £0.18m profit)
· Sales from Alliance Partners £0.01m (2019: £0.36m)
· Overseas sales £0.02m (2019: £0.13m)
· Exceptional costs of £0.58m 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 £0.73m (gross) to provide working capital
· Net cash balance at 30 June 2020 was £0.78m (30 June 2019: £0.74m)
· Sales of £0.15m to 31 October 2020
· Orders received but not yet invoiced to 16 November 2020 £0.3m
· Net cash balance at 6 November 2020 of £0.28m
· 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 £44.48m 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).
Revenue for the year was £0.45m (2019: £1.38m). The loss before taxation was £1.41m (2019: £0.18m profit).
At 30 June 2020, cash and cash equivalents amounted to £0.78m (2019: £0.74m).
The directors propose no dividends (2019: nil) in the year.
For the year ended 30 June 2020
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.
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.
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.
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.
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.
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.
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.
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.
· Business Development - UK
The Group achieved sales in the year of £0.45m (2019: £1.38m). Alliance partners contributed £0.014m 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.
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 £0.02m (2019 - £0.13m). 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.
The Group offers pilots but only on a paid basis and only to customers with large estates.
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.
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
| |
|
2020 |
2019 |
| |
Notes |
£'000 |
£'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.
| |
Group |
Company |
|||
| |
|
2020 |
2019 |
2020 |
2019 |
| |
Notes |
£'000 |
£'000 |
£'000 |
£'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 £890k (2019: £19k 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.
| |
|
|
|
|
| Group |
Company |
|||
| |
2020 |
2019 |
2020 |
2019 |
| |
£'000 |
£'000 |
£'000 |
£'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.
| |
Share capital |
Share premium |
Share based payment reserve |
Retained earnings |
Total equity |
| |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
| Balance at 1 July 2018 |
2,931 |
981 |
45 |
(3,843) |
114 |
| 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.
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.
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 £'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.
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.
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.
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.
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.
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.
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.
(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 2020 |
£'000 |
£'000 |
£'000 |
£'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 £1k (2019: £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 2020 Euro and US dollar exchange rates would have increased the Group's loss after tax by less than £1k (2019: £1k).
· Other Price Risk
The Group does not hold external investments in equity securities and therefore is not exposed to other price risk.
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.
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.
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 £1,409,000 in the year (2019: profit of £182,000). 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 £6.4m.
(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.
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 June 2020 |
|
Year ended 30 June 2019 |
|
| |
Sales revenue |
% of total revenue |
Sales revenue |
% of total revenue |
| |
£'000 |
|
£'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 |
| |
£'000 |
|
| Customer 1 |
157 |
35 |
| Customer 2 |
108 |
24 |
No other single customer represented more than 10% of the sales revenue for the year.
Operating (loss)/profit is stated after charging/(crediting):
| |
|
|
| Year ended 30 June 2020 |
Year ended 30 June 2019 |
|
| |
£'000 |
£'000 |
| Depreciation of property, plant & equipment |
6 |
21 |
| Amortisation of intangible assets |
47 |
47 |
| Cost of inventories recognised as an expense |
55 |
69 |
| Year ended 30 June 2020 |
Year ended 30 June 2019 |
|
| |
£'000 |
£'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 30 June 2020 |
Year ended 30 June 2019 |
| |
£'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 |
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 2020 |
Year ended 30 June 2019 |
| |
£'000 |
£'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 2020 |
Year ended 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 2020 |
Year ended 30 June 2019 |
| |
£'000 |
£'000 |
| Furlough grants |
55 |
- |
| |
55 |
- |
Other income in the year represents furlough grants received under the government job retention scheme.
| |
Year ended 30 June 2020 |
Year ended 30 June 2019 |
| |
£'000 |
£'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 |
- |
- |
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 £6.4m (2019: £5.6m) which at the current tax rate would equate to £1.22m (2019: £1.06m).
The calculation of earnings per share is based on the loss for the year attributable to equity holders of £1,409k (2019: £182k 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.
| Group |
2020 |
2019 |
| |
£'000 |
£'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. |
||
| |
||
| Group |
2020 |
2019 |
| |
£'000 |
£'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.
| Company |
2020 |
2019 |
| |
£'000 |
£'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 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% |
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.
| Group |
2020 |
2019 |
| |
£'000 |
£'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 |
| |
£'000 |
£'000 |
£'000 |
£'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 £314,000 in respect of the acquisition and potential reverse takeover of PHD.
Amounts due from group undertakings is covered by a £250,000 loan facility (2019: £250,000) 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 £14k (2019: £1k) were past due but not impaired. The ageing analysis of these trade receivables is as follows:
| |
2020 |
2019 |
| |
£'000 |
£'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 |
| |
£'000 |
£'000 |
| Pounds sterling |
83 |
116 |
| Euros |
- |
1 |
| |
83 |
117 |
| |
|
|
| |
2020 |
2019 |
2020 |
2019 |
| |
Group |
Group |
Company |
Company |
| |
£'000 |
£'000 |
£'000 |
£'000 |
| Cash and bank balances |
778 |
738 |
596 |
717 |
18. Trade and other payables
| |
2020 |
2019 |
2020 |
2019 |
| |
Group |
Group |
Company |
Company |
| |
£'000 |
£'000 |
£'000 |
£'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 £nil (2019: £nil).
19. Borrowings
| |
|
|
|
|
| |
2020 |
2019 |
2020 |
2019 |
| |
Group |
Group |
Company |
Company |
| |
£'000 |
£'000 |
£'000 |
£'000 |
| Borrowings |
181 |
- |
- |
- |
| |
181 |
- |
- |
- |
20. Share capital
| |
2020 |
2019 |
| |
£'000 |
£'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 £326k (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 £291k.
On 9 January 2020, the Company raised £300k (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 £287k.
On 23 January 2020, the Company raised £100k (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 £99k.
At the year end date, the following options had been granted:
| Date of Grant |
At 1 July 2019 |
At 30 June 2020 |
Exercise price |
Exercisable from |
Exercisable 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 cost (loans and receivables) |
Fair value through profit and loss |
Total |
Amortised cost (loans and receivables) |
Fair value through profit and loss |
Total |
| |
Group |
Group |
Group |
Company |
Company |
Company |
| |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
| |
|
|
|
|
|
|
| Trade and other receivables (excluding prepayments) |
41 |
- |
41 |
- |
- |
- |
| |
41 |
- |
41 |
- |
- |
- |
| |
|
|
|
|
|
|
| Financial liabilities |
||||||
| |
||||||
| |
Amortised cost (loans and payables) |
Fair value through profit and loss |
Total |
Amortised cost (loans and payables) |
Fair value through profit and loss |
Total |
| |
Group |
Group |
Group |
Company |
Company |
Company |
| |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
| |
|
|
|
|
|
|
| Trade and other payables |
627 |
- |
627 |
515 |
- |
515 |
| Borrowings |
181 |
- |
181 |
- |
- |
- |
| |
808 |
- |
808 |
515 |
- |
515 |
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
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 £nil (2019: £nil) 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:
| |
Number 2020 |
Weighted average exercise price 2020 |
Number 2019 |
Weighted average exercise price 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 |
- |
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 |
| |
£'000 |
£'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 £120k (2019: £138k). 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 £58k (2019: £64k) and at the year end the amounts due to Peterhouse Capital Limited were £8k (2019: £nil).
During the year, the Company charged its subsidiary, Sabien Technology Limited, £50k (2019: £53k) by way of management charges. Sabien Technology Limited repaid £564k (2019: £219k) during the year in respect of working capital loans and at the year end the amount outstanding, excluding a provision of £nil (2019: £nil) charged in the year, was £50k (2019: £41k).
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 £44.48m 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.
Final Results & Update on Proposed Acquisition07:00:0619 Nov 2020Results7978F