Company No.: 05568060
Sabien Technology Group Plc
Annual Report and Consolidated Financial Statements
For the year ended 30 June 2017
Company Information
DIRECTORS
Bruce Gordon (Chairman)
Alan O’Brien
Gus Orchard (retired 30 June 2017)
Karl Monaghan
Dr Martin Blake
SECRETARY
Edward Sutcliffe (appointed 30 June 2017)
Gus Orchard (retired 30 June 2017)
COMPANY NUMBER
05568060
REGISTERED OFFICE
WEBSITE
AUDITORS
BANKERS
34 Clarendon Road
Watford
Herts
WD17 1JJ
www.sabien-tech.co.uk
Kingston Smith LLP
Devonshire House
60 Goswell Road
London
EC1M 7AD
National Westminster Bank Plc
72-74 High Street
Watford
Herts
WD17 2GZ
NOMINATED ADVISER and BROKER Beaumont Cornish Limited,
REGISTRARS
SOLICITORS
EC2M 2SJ
2nd Floor, Bowman House,
29 Wilson Street,
London
Share Registrars Limited
The Courtyard
17 West Street
Farnham
Surrey
GU9 7DR
Moore Blatch LLP
11 The Avenue
Southampton
Hants
SO17 1XF
1
Contents
Chairman & Chief Executive Officer’s Report
Strategic Report
Directors’ Report
Corporate Governance
Remuneration Report
Directors’ Responsibilities Statement
Independent Auditors’ Report to the Members of Sabien Technology
Group Plc
Consolidated Statement of Comprehensive Income
Consolidated and Company Statements of Financial Position
Consolidated and Company Cash Flow Statements
Consolidated Statement of Changes in Equity
Company Statement of Changes in Equity
Notes to the Consolidated Financial Statements
3
5
11
13
16
18
19
24
25
26
27
28
29
2
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 2017.
Sabien Technology Group highlights 2017
Sales for the year £0.51m (2016: £0.88m)
Loss before tax £1.65m (2016: £1.62m loss)
Sales from Alliance Partners £0.043m (2016: £0.173m)
Overseas sales £0.198m (2016: £0.107m)
Fund raises of £1.23m (gross) to fund P40 pilot program, overseas pilot programme
and M2G development.
Net cash balance at 30 June 2017 was £0.026m (2016: £0.24m)
Sales pipeline of £8.7m at 30 June 2017 (2016: £12.2m)
Highlights since the year end
Sales pipeline at 4 December 2017 standing at c£9.12m
In July introduced rental payment option and in December received notification of its
first significant rental contract with large UK commercial Landlord
In October introduced ‘Forensic Boiler Audit service’ designed to identify operational
inefficiencies in commercial boilers and heating systems.
Net cash balance at 6 December 2017 of £0.028m
Financial results
Revenue in the year was £0.51m (2016: £0.88m). The loss before taxation was £1.65m (2016:
£1.62m loss).
Sales for the year were 42% lower than in the previous year primarily due to free pilots not
having a material effect on reducing timings of our sales cycle.
At 30 June 2017, cash and cash deposits amounted to £0.026m (2016: £0.24m). The Board
plans to raise additional equity funds for the Group in the early part of 2018.
Dividend policy
In view of the loss incurred in the year, no dividend is proposed (2016: nil).
3
Board, management and people
The Board has two Executive and two Non-Executive Directors. In June Gus Orchard retired
as Finance Director and Company Secretary of Sabien and of its subsidiary companies.
Edward Sutcliffe was appointed as Company Secretary and as interim finance director (non-
board level) until a permanent successor is appointed.
Current trading and outlook
The Board has managed the Group’s working capital tightly during the year, and given the
continuing unpredictability on the timing of conversion of the sales pipeline into sales orders,
the Board reduced costs wherever possible, including staff redundancies and agreement by the
non-Executive Board members to waive their fees until such time as profitability is achieved.
As a result, Group monthly costs have been reduced significantly from approximately £170k to
less than £100k per month on an ongoing basis.
The Board is still targeting monthly breakeven by December 2018, although the Group will
continue to need to raise additional equity funding to provide further working capital. Calendar
year-end cash balances are expected to be increased by the final payment of the contract
announced in June 2017, and the Company plans to raise additional equity funding in the early
part of 2018.
The Chairman, Bruce Gordon, has confirmed to the Board that he intends to support the
Company and participate in any such funding and subscribe for £100,000. Bruce Gordon has
agreed to advance his subscription amount with no interest cost to support the Group until the
fundraising is complete. The advance is a related party transaction under the AIM Rules and
the Independent Directors consider, having consulted with the Company’s Nominated Adviser,
that the terms of the advance are fair and reasonable insofar as the Company’s shareholders
are concerned.
The Board continues to focus its efforts on returning the company towards profitability and has
been frustrated by the unpredictability of conversion of the sales pipeline into sales orders, with
disappointing sales for the year under review. However, the Board is focusing on developing
recurring revenues from rental contracts and from Forensic Boiler Audits, a new consultancy
service being offered by the company. The Board believes that these new rental contracts offer
the potential to provide stable, consistent revenues and thereby over time provide a greater
visibility to the Board on future financial performance.
Despite the challenges, the Board remains confident about the Group’s product and services,
the potential market and therefore the prospects for the year ahead.
Bruce Gordon
Chairman
6 December 2017
Alan O’Brien
Chief Executive Officer
6 December 2017
4
STRATEGIC REPORT
For the year ended 30 June 2017
1. Review of the Company’s Business
The Group owns the rights to M1G and M2G, patented energy efficiency products for installation
on commercial boilers and water heaters, both within and outside the UK. It subcontracts the
manufacture of both products to its principal supplier, which is based in Northern Ireland, and
installation in the UK to a number of trained installation companies.
The Group has earned a strong reputation in the market place, being recognised as the market
leader in Boiler Optimisation Controls.
The company between 2015 and 2017 completed a total of 56 ‘free’ major pilots in the UK and
Overseas. Our key driver was to test whether offering free pilots would help to remove
uncertainty around sales order lumpiness and to help mitigate the delays in mobilising M2G
pilots and contract awards brought about by long buying lead times and public tender
processes.
While offering ‘free’ pilots has now proven not to materially shorten the sales cycle we are in
commercial discussions about installing our technology with many clients who took part in our
free pilot offer and the management team is confident these discussions will materialise into
sales orders over the next 12 months helping the company return to monthly break-even in
December 2018.
The continuing unpredictability of sales orders required the company to reduce its operating
expenditure during the period under review. This included staff redundancies and non-
Executive Board members agreeing to waive their fees. Wherever possible we have reduced
our other administration expenses and overheads.
As a result, we have reduced Group monthly cost expenditure from approximately £170k to
less than £100k per month and will continue to identify cost saving initiatives to help cash flow
while safeguarding operational competencies needed to service our ongoing client contractual
obligations.
For the financial year under review, the target was to run up to 40 multi-site M2G pilots in the
2016/17 heating season (“P40”). 26 major pilots were completed before the decision was taken
to cut short our piloting season early to preserve cash and reduce operational expenditure. The
Management team is now focused on converting the ‘free’ pilot pipeline into sales orders.
To help reduce long order lead times the company introduced a M2G rental option making
piloting and financing of M2G projects easier and risk free for its clients. A fixed monthly rental
per M2G is charged with an open-ended term of contract.
Future rental income is expected to provide the company with cash flow and recurring revenue
helping management make sales forecasts with greater confidence.
5
The company also introduced a new consultancy service ‘Forensic Boiler House Audit’ on a fixed
rental fee per month.
Management has developed a robust methodology and process for pilot programmes and a
component of this service is identifying boiler plant, BMS and AMR issues that have affected
energy savings during the pilot period.
This approach is both necessary and thorough as key variables are measured on ‘live’ operating
sites where you are analysing whole system variables with all their legacy issues and problems.
Using our own in-house software, we are capable of remotely identifying plant room efficiency
blind spots and underperforming plant components.
When issues are correctly identified and resolved energy efficiency performance will improve,
it reduces ‘same issue’ reactive/proactive maintenance costs and helps to improve cross
function relationships i.e. Head of Engineering and Energy Managers.
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 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.
2. Principal risks and uncertainties facing the Group
The principal risks faced by the Group are:
Downward pressure on gas and oil prices
Technology developments and competitive products
Changes in legislation
Supply chain issues
Non-recurring revenue model however this is now being addressed
Brand awareness and maintenance of reputation
Employee retention
Inability to meet customer demand
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.
6
UK Energy Efficiency Barriers
Information, its provision and lack of trust, misaligned financial incentives, and behaviour
barriers mean energy efficiency is undervalued. These barriers are often inter-related and work
together to reduce investment in energy efficiency.
The UK market is under developed thus has relatively limited/mixed expertise and ‘know-how’
on the Client, vendor side for energy efficiency investment.
Information
One of the key characteristics of an embryonic market is there is a lack of access to trusted
and appropriate information.
Energy efficiency improvements are typically made through purchasing upgraded equipment,
retro-fit technology and additives however the biggest challenge facing the market is identifying
the absolute savings in energy and emissions which means that potential buyers are not in a
position to assess the benefits of an energy efficiency proposal.
Financing
Energy efficiency projects can be undermined by the absence of standardised monitoring and
verification processes which means that the benefits of energy efficiency investments are not
trusted.
It can be difficult to relate back to individual activities to identify opportunities to make energy
efficiency improvements. In the absence of clear, trusted information, many buyers do not
prioritise energy efficiency investments.
Misaligned financial incentives
It is not always the case that the person who is responsible for making energy efficiency
improvements will receive the benefits of their actions.
Commercial rented tenants are responsible for their own bills and therefore it is in their interest
to reduce the bills, but contractual arrangements around landlord/tenants or facilities
management may inhibit investment.
Therefore, energy efficiency investments are not prioritised as they might otherwise be. Energy
costs can be a relatively small proportion of costs for many sectors, but in aggregate that
energy use is a huge ask of our energy system.
Undervaluing energy efficiency
The lack of salience of energy efficiency increases the impact of hassle costs and behavioural
barriers. Energy efficiency changes may involve significant hassle costs for those carrying out
the investment, which increases the costs of the investment e.g. disruption caused by building
works or disruption to production lines.
Energy efficiency improvements may not be seen as strategic for a company and therefore not
prioritised.
Outside of the energy intensive industry sectors, energy bills are only a small proportion of
business costs. If the relative gain is small, then the hassle costs can act as a significant barrier,
especially if there is uncertainty around the benefits of the investment.
7
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 SPB criteria. Wider economic uncertainty is also reducing willingness to invest.
3. Performance of the business in the financial year
Business Development - UK
The Group’s sales performance in the year was well below management expectations, early
efforts in the year were directed towards achieving the targeted number of pilots (see below)
which management believes will convert to sales orders in the future.
The desired effect of reducing the length of the sales cycle by offering free pilots has not
materialised resulting in sales orders forecasted taking longer to close during the period under
review.
The Group estimates that the sales pipeline at 30 June 2017 stood at £8.74m (2016 - £12.2m).
Alliance partners contributed £0.043m of sales representing 8.5% 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. Major
alliance partners with whom we have done business in the year included Carillion, CBRE, Jones
Lang LaSalle and SSE Contracting.
Business Development - Overseas
The Group sells M2G internationally through its network of “Sabien Tech Centres”. A “Sabien
Tech Centre” is a company outside the UK with:
o An established distribution network and an existing client base in the
commercial and industrial heating sector
o Engineering capability and capacity
o Competence in commercial boilers and currently offering energy efficiency
solutions as part of their product and service suite
The channel will require a level of M2G operational support in knowledge transfer/sharing and
product training.
During the course of the financial year, overseas sales represented 40% of total sales at £0.20m
(2016 - £0.10m). In 2013, the Group appointed Fireye, Inc. as a non-exclusive distributor in
the USA as well as other overseas territories. Through this relationship with Fireye and with
other parties, we have appointed Tech Centres in a number of territories throughout the world.
We remain confident this relationship will in time bring material value to the Group in the future.
For further information on Fireye NXM2G, please visit www.flamecontrols.com.
8
UK M2G Pilots
The Group will offer pilots but only on a paid basis and only to customers with large estates.
M1G
The Group launched its M1G a product for use on hot water heaters in 2014. The M1G is
designed to prevent the inherent problem of short cycling within direct hot water generators
resulting in unnecessary fuel consumption during low load demands. Short cycling is caused
when the hot water generator’s minimum firing capacity exceeds the current system loss,
causing the hot water generator to fire for very short periods. M1G is sold to customers as an
adjunct to M2G sales.
EndoTherm
The Group entered into an exclusive distribution licence (multi-site commercial) market for the
EndoTherm product.
EndoTherm is an energy saving additive that can be added to any wet based central heating
system. Endotherm claims that adding a 1% concentration of the fluid can deliver an energy
reduction of up to 15%.
Sabien tested EndoTherm in 15 commercial boiler sites during the period under review as part
of our P40 pilot programme. The results indicated that EndoTherm performance on buildings
where gas is used for both heating and hot water and energy is used for other appliances (i.e.
the vast majority of commercial buildings) proved challenging to quantify and while adding
EndoTherm had a positive effect in some sites results were varied overall.
The manufacturer and owner of EndoTherm continues to substantiate the effectiveness of the
product both in the lab and field and we look forward to receiving when appropriate further
verification substantiating their claims. However, until this work is completed and in the public
domain, the company does not intend piloting or promoting EndoTherm at this time.
Key Performance Indicators (“KPIs”)
The Group has identified a number of 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 the sales pipeline, 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 476 units (2016: 563 units) and the gross profit margin was 66% (2016: 63.9%).
This increase in gross margin was expected and reflected the impact of offering free pilots to
customers in 2016. In addition, overhead decreased in the year under review as a result of our
decision to reduce headcount.
Pipeline: We are continually refining the pipeline and only include in it any potential business
that has been quoted for, and for which we are in regular contact with the client, or for which
the client has given the Group an indicative start date.
9
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.
Personnel: In the short-term the Group is not looking to recruit.
4. Strategy
The Group has a 5-year growth strategy and is refined to reflect the learnings from our free
piloting programme.
Significantly scaling M2G rental contracts in the UK.
Converting 30% of our P35/P40 to sales over the next 12 months.
Commercialising our Forensic Boiler Audit service.
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
This report was approved and authorised for issue by the Board on 6 December 2017 and
signed on its behalf by:
Alan O’Brien
Chief Executive Officer
6 December 2017
10
Directors’ Report
For the year ended 30 June 2017
The directors present their report and the consolidated financial statements for the year ended
30 June 2017. The financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRS). In accordance with S414C(11) of the Companies Act
2006, the directors have chosen to include information about future developments and financial
instrument risk in the Strategic Report.
Principal Activities
The principal activity of the Group during the year was the design, manufacture and sale of
M1G and M2G, boiler energy efficiency technologies, which are proven to reduce energy
consumption on commercial boilers by up to 35%.
Review of Business
A review of the business, its development and performance for the year and its position at the
year end, together with the future prospects of the Group, is contained in the Chairman & Chief
Executive Officer’s Report and the Strategic Report.
Governance and the Board
The Board’s governance system provides balanced support for the executive management team
in the development of the Group’s strategy and with the need to ensure effective monitoring
of its implementation. The Board and its committees have considered the significant events of
the year and their impact on the Group’s business and reputation.
The Audit Committee is currently chaired by Karl Monaghan; the Remuneration Committee is
chaired by Bruce Gordon. The Board remains confident in the work of those committees and
the overall system of governance.
Results and Dividends
The Group loss for the year, before taxation, amounted to £1,651k (2016: £1,620k loss). The
Directors do not recommend a final dividend this year (2016 – nil).
Directors
The Directors who served during the year and their beneficial interest in the Company’s issued
share capital were:
Date of
appointment
New Ordinary
shares of 0.005p
each
Ordinary shares
of 5p each
A.O’Brien
G.Orchard (retired 30
June 2017)
K.Monaghan
B.Gordon
2017
25 October 2005 11,700,000 10.6 11,700,000
100,000
100,000
10 October 2006
2016
0.1
%
%
26.6
0.2
1 September 2007
2.3
30 September 2016 14,745,000 13.4
2,522,495
1,397,945
1,650,000
3.2
3.7
11
M. Blake does not have a beneficial interest in the Company’s issued share capital. B. Gordon
is also a director of Thames Valley Capital Limited, an advisor to TVI 2 Limited, which holds
4,108,356 ordinary shares in the Company, representing 3.7% of the issued share capital. He
is therefore interested, directly and indirectly, in 18,853,356 New Ordinary shares, representing
17.1% of the issued share capital.
Substantial Shareholdings
At 28 November 2017, the Company had been notified that (other than Directors) the following
were interested in 3% or more of the issued capital of the Company:
Hargreaves Lansdown Ltd
W B Ltd
J.M.Finn & Co
Jim Ltd
BNY(OCS) Ltd
Rathbone Ltd
Lynchwood Nominees Ltd
Forest Nominees Ltd
Number of New Ordinary
shares
20,115,449
15,823,333
7,812,500
7,502,708
6,784,632
5,157,500
4,850,000
4,108,356
% of issued share capital
18.24
14.35
7.09
6.80
6.15
4.68
4.40
3.73
At the date of this report, there were 110,254,867 New Ordinary shares in issue.
Auditors
Each of the persons who is a director at the date of approval of this annual report confirms
that:
so far as the director is aware, there is no relevant audit information of which the
company’s auditors are unaware; and
the director has taken all the steps that he ought to have taken as a director in order
to make himself aware of any relevant audit information and to establish that the
company’s auditors are aware of that information.
This confirmation is given and should be interpreted in accordance with the provisions of section
418 of the Companies Act 2006.
The auditors, Kingston Smith LLP, will be proposed for reappointment in accordance with
section 489 of the Companies Act 2006.
This report was approved and authorised for issue by the Board on 6 December 2017 and
signed on its behalf by:
Bruce Gordon
Chairman
6 December 2017
Alan O’Brien
Chief Executive Officer
6 December 2017
12
Corporate Governance
The Board is accountable to the shareholders for good corporate governance of the Group. The
principles of corporate governance and a code of best practice are set out in the UK Corporate
Governance Code (UKCGC) as applicable to accounting periods beginning before 1 October
2012 issued in June 2010. Although under the rules of the Alternative Investment Market (AIM)
the Company is not required to comply in full with the code nor state areas in which it does not
comply, the Board looks to the code for best practice in so far as is reasonably practicable for
a Company of this size.
Statement of compliance with the UKCGC and applying the principles of good
governance
The Company is committed to high standards of corporate governance throughout the Group.
As an AIM company, it is not obliged to report its compliance with the UKCGC. Nonetheless,
the Company is committed to meeting these principles as far as it reasonably can and the
commentary below reflects the extent to which the Company has complied with the UKCGC
during the period under review.
Board effectiveness
The Board, which is set up to manage the Company and Group, meets formally at least six
times per year and in the period under review met on eight occasions. At the period end, the
Board comprised four directors – one executive and three non-executive. Although the non-
executive directors may not be regarded as strictly independent in terms of the Code, due to
their having been granted options, albeit at an insignificant level, the Board considers that they
act independently and professionally at all times and bring a wide experience at a senior level
of business operations and strategy and have a degree of knowledge and expertise gained from
other areas of business, both at home and overseas.
At each of these regular Board meetings, the Board receives the latest financial and
management information available which generally consists of:
Management accounts setting out actual performance against budget;
Management discussion on variance analysis;
Working capital cash flow position; and
Sales forecasts and forecasting methodologies.
The Board reserves to itself a range of key decisions to ensure that it retains proper direction
and control of the Company whilst delegating authority to individual directors who are
responsible for the day to day management of the business.
All directors have access to the advice and services of the Company Secretary and can also
seek independent professional advice, if necessary, at the Company’s expense.
Board appointments
All appointments to the Board are discussed at a full Board meeting and each member is given
the opportunity to meet the individual concerned prior to an appointment being made.
As permitted by the UKCGC, due to the small size of the Board, it is considered inappropriate
to establish a Nominations Committee.
13
Chairman and Chief Executive Officer
The Board has shown its commitment to dividing responsibility for running the Board and the
business by appointing Bruce Gordon as Non-Executive Chairman and Alan O’Brien as Chief
Executive Officer.
The Remuneration Committee
The Remuneration Committee, which is composed of the non-executive directors and chaired
by Bruce Gordon, meets as required during each financial year. It is responsible for reviewing
the performance of the executive directors and setting the scale and structure of their
remuneration and the basis of their service agreements with due regard to the interest of
shareholders. The Remuneration Committee shall also determine the allocation of share options
to employees. It is a rule of the Remuneration Committee that a Director shall not participate
in discussions or decisions concerning his/her own remuneration.
The Audit Committee
The Audit Committee, which is composed of the non-executive directors and during the year
under review was chaired by Karl Monaghan, meets no less than twice a year. It is responsible
for making recommendations to the Board on the appointment of auditors and the audit fee,
for reviewing the conduct and control of the annual audit and for reviewing the operation of
the internal financial controls. It also has responsibility for the reporting of the financial
performance of the Group and for reviewing financial statements prior to publication.
Re-election of Directors
Directors retire by rotation in accordance with the Company’s Articles of Association which
prescribe that at every Annual General Meeting one third of the directors for the time being or,
if their number is not a multiple of three, then the number nearest to but not exceeding one
third, shall retire from office. Non-executive directors are initially appointed for a three year
term but their appointment is terminable by either party on three months’ written notice.
Shareholder relations
The Company maintains a website (www.sabien-tech.co.uk) where the Group’s statutory
accounts will be accessible. The website conforms to the requirements of AIM rule 26 and all
relevant information can be found there.
Queries raised by shareholders are dealt with either by the Chief Executive Officer or the
Company Secretary.
Accountability and audit
The Board believes that the Annual Report and financial statements play an important part in
presenting all shareholders with an assessment of the Group’s position and prospects. This is
achieved in the Chairman & Chief Executive Officer’s Report which contains a detailed
consideration of the Group’s financial position and prospects.
Internal control
The Board of Directors has overall responsibility for the Group’s system of internal control and
for reviewing its effectiveness. The purpose of the system of internal control is to manage
rather than eliminate the risk of failure to achieve business objectives and can only provide
reasonable, but not absolute, assurance against material misstatement or loss.
14
The Directors have established an organisational structure with clear operating procedures,
lines of responsibility and delegated authority. In particular, there are clear procedures for
capital investment appraisal and approval and financial reporting within a comprehensive
financial planning and accounting framework. The Board has reviewed the need for an internal
audit function and concluded that such a function is not currently appropriate given the size of
the Group.
15
Remuneration Report
This report should be read in conjunction with note 8 to the accounts. The Remuneration
Committee is responsible for reviewing the level and make-up of the remuneration of executive
directors. In doing so, the Committee’s aims are:
To determine the policy for the remuneration of the executive directors;
To review the on-going appropriateness of the remuneration policy;
To approve the design of and review share incentive plans and bonus schemes and to
determine the awards to be made under such plans or schemes; and
To ensure that the remuneration policies adopted by the Company give due regard to
any legal requirements, the provisions and recommendations in the UKCGC and the
AIM rules and associated guidance.
The components of remuneration are:
Basic salary and benefits determined by the Remuneration Committee which are
included in employment agreements and reviewed annually;
Bonuses based upon performance of the Company and the individual concerned; and
Share options.
Service contracts
The employment contracts of the executive directors with the Company are terminable by either
party with no less than six months’ notice in writing to the other. The remuneration of the non-
executive directors is determined by the Board within the limits set out in the Articles of
Association.
The service contracts of the directors, one third of whom who are eligible for re-election at the
Annual General Meeting, are as follows:
A.O’Brien
G.Orchard (retired 30 June 2017)
K.Monaghan
M.Blake
B.Gordon
Notice period
6 months
6 months
3 months
3 months
3 months
Directors’ remuneration during the period (audited)
Salaries
and fees
£’000
Taxable
benefits
£’000
Total
2017
£’000
Total
2016
£’000
Executive directors
A.O’Brien
G.Orchard (retired 30 June 2017)
Non-executive directors
25
K.Monaghan
25
M.Blake
40
B.Gordon
M Maes (resigned 18 November 2015)
332
Total
136
106
2
6
-
-
-
-
8
138
112
25
25
40
-
340
138
110
25
25
21
10
329
Fees paid to K.Monaghan, M.Blake and B.Gordon were paid to Ashling Capital LLP, Blake
Advisory Pte. Ltd and Thames Valley Capital Limited respectively.
16
Sabien Technology Group Share Option Plan (audited)
Under the Plan, the Group can make awards of share options to selected directors and eligible
employees.
Details of options for directors who served during the year are as follows:
Date of
Grant
1 July
2016
30 June
2017
Exercise
price
Date from
which
exercisable
Expiry
Date
A.O’Brien
G.Orchard
14/12/06
01/04/10
14/12/06
01/04/10
K.Monaghan 12/10/07
01/04/10
25/11/10
M.Blake
500,000
74,483
346,152
51,565
100,000
14,323
91,743
-
74,483
-
-
100,000
14,323
91,743
52.0p
54.5p
52.0p
54.5p
50.0p
54.5p
54.5p
14/12/09 14/12/16
01/04/13 01/04/20
14/12/09 14/12/16
01/04/13 01/04/20
12/10/10 12/10/17
01/04/13 01/04/20
25/11/13 25/11/20
Total
1,178,266 280,549
Share options granted to G.Orchard lapsed upon his retirement.
The mid-market price of the Company’s shares at the end of the financial year was 1.5p.
Bruce Gordon
Chairman of the Remuneration Committee
6 December 2017
17
Directors’ Responsibilities Statement
The directors are responsible for preparing the Annual Report and the financial statements in
accordance with applicable laws and regulations.
Company law requires the directors to prepare such financial statements for each financial year.
Under that law, the directors have prepared the group and parent financial statements in
accordance with International Financial Reporting Standards (IFRSs) as adopted by the
European Union. Under company law, the directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of affairs of the group
and the company and of the profit or loss of the group for that period. In preparing these
financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable IFRSs as adopted by the European Union have been followed,
subject to any material departures disclosed and explained in the financial statements;
and
prepare the financial statements on the going concern basis unless it is inappropriate
to presume that company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to
show and explain the company’s transactions and disclose with reasonable accuracy at any
time the financial position of the company and enable them to ensure that the financial
statements comply with the Companies Act 2006. They are also responsible for safeguarding
the assets of the company and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial
information included on the company’s website. Legislation in the United Kingdom governing
the preparation and dissemination of financial statements may differ from legislation in other
jurisdictions.
We confirm to the best of our knowledge that:
1.
2.
the financial statements, prepared in accordance with International Financial Reporting
Standards as adopted by the EU, give a true and fair view of the assets, liabilities,
financial position and profit or loss of the company and the undertakings included in
the consolidation taken as a whole; and
the strategic report and the directors’ report include a fair review of the development
and performance of the business and the position of the company and the undertakings
included in the consolidation as a whole together with a description of the principal
risks and uncertainties that they face.
On behalf of the Board:
Chief Executive Officer
Alan O’Brien
6 December 2017
18
Independent Auditors’ Report to the Members of Sabien Technology Group Plc
Opinion
We have audited the financial statements of Sabien Technology Group Plc (the ‘parent
company’) and its subsidiaries (the ‘group’) for the year ended 30 June 2017 which comprise
the Consolidated Statement of Comprehensive Income, the Consolidated and Parent Company
Statements of Financial Position, the Consolidated and Parent Company Statements of Cash
Flows, the Consolidated and Parent Company Statements of Changes in Equity and notes to
the financial statements, including a summary of significant accounting policies. The financial
reporting framework that has been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as
regards the parent company financial statements, as applied in accordance with the provisions
of the Companies Act 2006.
In our opinion:
the financial statements give a true and fair view of the state of the group’s and of the
parent company’s affairs as at 30 June 2017 and of the group’s loss for the year then
ended;
the group financial statements have been properly prepared in accordance with IFRSs
as adopted by the European Union;
the parent company financial statements have been properly prepared in accordance
with IFRSs as adopted by the European Union and as applied in accordance with the
provisions of the Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of
the Companies Act 2006.
This report is made solely to the company’s members, as a body, in accordance with Chapter
3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken for no purpose
other than to draw to the attention of the company’s members those matters which we are
required to include in an auditor’s report addressed to them. To the fullest extent permitted by
law, we do not accept or assume responsibility to any party other than the company and
company’s members as a body, for our work, for this report, or for the opinions we have
formed.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK)
(ISAs(UK)) and applicable law. Our responsibilities under those standards are further described
in the Auditor’s Responsibilities for the audit of financial statements section of our report. We
are independent of the group in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied
to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
Material uncertainty related to going concern
We draw attention to note 3 (iii) in the financial statements, which notes that the conversion
of opening pipeline to sales revenue in the year amounted to 2.66% which was a significant
reduction on historical conversion rates, and further notes that the group made a loss of
£1,621,000 for the year and had limited cash resources at the year end. The ability of the
group to grow its revenues and return to profitability depends on its ability to convert its
pipeline into sales revenue and to successfully launch its rental income stream. As stated in
note 3 (iii) these events or conditions, along with the other matters described in note 3 (iii)
indicate that a material uncertainty exists which may cast significant doubt on the company’s
ability to continue as a going concern. Our opinion is not modified in respect of this matter.
19
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the financial statements of the current period and include the most
significant assessed risks of material misstatement (whether or not due to fraud) we
identified, including those which had the greatest effect on: the overall audit strategy, the
allocation of resources in the audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide a separate opinion on these
matters.
In addition to the matter described in the ‘Material uncertainty related to going concern’
paragraph we have determined the matters described below to be the key audit matters to
be communicated in our report.
Audit Area and Description
Audit approach
in
intangible asset
Carrying value of intangibles
The
the Consolidated
Statement of Financial Position consists of the
intellectual property representing the rights to
the M2G product acquired from the inventors.
The continued decrease in revenue over the past
three years and the increase in pre taxation
losses potentially indicated an impairment to the
carrying value of the intangible asset.
In order to satisfy ourselves that the carrying
value of
intangible asset was
appropriate:
the
We
reviewed
the assumptions
underpinning the Directors’ IAS36
valuation
intellectual
property.
the
of
We assessed the Directors’ assertion
that no impairment was required by
reference to trading performance
and forecasts.
We considered the appropriateness
for
the amortisation policy
of
intellectual property.
Carrying value of investments in
subsidiaries
The cost of investment in subsidiaries in the
Company Statement of Financial Position has
increased by £2.523m in the past two years due
to the capitalisation of loans to the subsidiary
following the decrease in revenue and increase in
the pre taxation losses in the period. These
factors potentially indicated an impairment to the
carrying value of the Investment in subsidiaries.
In order to satisfy ourselves that the carrying
value of the investment in subsidiaries was
appropriate:
We checked the calculation of the
cost of investment addition in the
year.
We
reviewed
the assumptions
underpinning the Directors’ IAS36
valuation of the
in
subsidiaries.
investment
We assessed the Directors’ assertion
that an impairment of £2.523m was
required by reference to trading
performance and forecasts.
20
Our application of materiality
The scope and focus of our audit was influenced by our assessment and application of
materiality. We define materiality as the magnitude of misstatement that could reasonably be
expected to influence the economic decisions of the users of the financial statements. We
use materiality to determine the scope of our audit and the nature, timing and extent of our
audit procedures and to evaluate the effect of misstatements on the financial statements both
individually and as a whole.
Due to the nature of the Group we considered income and profitability to be the main focus
for the readers of the financial statements and accordingly this consideration influenced our
judgement of materiality. Based on our professional judgement, we determined materiality
for the Group to be £26,000, based on an initial calculation of the loss before taxation.
On the basis of our risk assessments, together with our assessment of the overall control
environment, our judgement was that performance materiality (i.e. our tolerance for
misstatement in an individual account or balance) for the Group was 60% of materiality,
namely £15,600.
We agreed to report to the Audit Committee all audit differences in excess of £1,300, as well
as differences below that threshold that, in our view, warranted reporting on qualitative
grounds. We also reported to the Audit Committee on disclosure matters that we identified
when assessing the overall presentation of the financial statements.
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its
environment, including Group-wide controls, and assessing the risks of material misstatement
at the Group level. The Group is audited by one audit team, led by the Senior Statutory
Auditor. Our approach in respect of key audit matters is set out in the table in the Key Audit
Matters Section above.
Other information
The other information comprises the information included in the annual report, other than the
financial statements and our auditor’s report thereon. The directors are responsible for the
other information. Our opinion on the financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in our report, we do not express any form
of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the audit or otherwise appears to
be materially misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a material misstatement in the
financial statements or a material misstatement of the other information. If, based on the work
we have performed, we conclude that there is a material misstatement of this other information,
we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the directors’ remuneration report to be audited has been properly
prepared in accordance with the Companies Act 2006.
21
In our opinion, based on the work undertaken in the course of the audit:
the information given in the strategic report and the directors’ report for the financial
year for which the financial statements are prepared is consistent with the parent
company financial statements; and
the strategic report and the directors’ report have been prepared in accordance with
applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and its
environment obtained in the course of the audit, we have not identified material misstatements
in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters where the Companies Act 2006
requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns
adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting
records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 18, the
directors are responsible for the preparation of the financial statements and for being satisfied
that they give a true and fair view, and for such internal control as the directors determine is
necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s
and the parent company’s ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the group or the parent company or to cease operations, or
have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect
a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs (UK) we exercise professional judgement and
maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those
risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for
our opinion. The risk of not detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.
22
Obtain an understanding of internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances, but not for the purposes
of expressing an opinion on the effectiveness of the group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the group’s or
the parent company’s ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw attention in our auditor’s report to
the related disclosures in the financial statements or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the
group or the parent company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements,
including the disclosures, and whether the financial statements represent the
underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the group to express an opinion on the consolidated
financial statements. We are responsible for the direction, supervision and performance
of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with
relevant ethical requirements regarding independence, and to communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence,
and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those
matters that were of most significance in the audit of the consolidated financial statements of
the current period and are therefore the key audit matters. We describe these matters in our
auditor’s report unless law or regulation precludes public disclosure about the matter or when,
in extremely rare circumstances, we determine that a matter should not be communicated in
our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.
[Signature]
John Staniforth (Senior Statutory Auditor)
for and on behalf of Kingston Smith LLP, Statutory Auditor
6 December 2017
Devonshire House
60 Goswell Road
London
EC1M 7AD
23
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2017
Revenue
Cost of sales
Gross profit
Notes
2017
£’000
509
(173)
336
2016
£’000
879
(317)
562
Administrative expenses
(1,990)
(2,184)
Operating loss
Investment revenue
Loss before tax
Tax credit
Loss for the year attributable to
equity holders of the parent
company
5
6
9
(1,654)
(1,622)
3
2
(1,651)
(1,620)
30
-
(1,621)
(1,620)
Other comprehensive income
-
-
Total comprehensive income for
the year
(1,621)
(1,620)
Loss per share in pence – basic
Loss per share in pence – diluted
10
10
(2.3)
(2.3)
(3.8)
(3.8)
The earnings per share calculation relates to both continuing and total operations.
The notes on pages 29 to 46 form part of these financial statements.
24
Consolidated and Company Statements of Financial
Position
As at 30 June 2017
Company Reg No: 05568060
ASSETS
Non-current assets
Property, plant and equipment
Intangible assets
Investment in subsidiaries
Total non-current assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets
Group
Company
2017
£’000
2016
£’000
2017
£’000
2016
£’000
Notes
11
12
13
14
15
16
59
414
-
473
133
82
26
241
121
461
-
582
221
209
235
665
-
-
3,601
3,601
-
-
4,904
4,904
-
69
14
83
-
69
215
284
TOTAL ASSETS
714
1,247
3,684
5,188
EQUITY AND LIABILITIES
Current liabilities
Trade and other payables
Total current liabilities
EQUITY
Equity attributable to equity holders
of the parent
Share capital
Other reserves
Retained earnings
Total equity
17
156
156
216
216
22
22
42
42
18
2,531
1,080
(3,053)
558
2,200
333
(1,502)
1,031
2,531
1,080
51
3,662
2,200
333
2,613
5,146
TOTAL EQUITY AND LIABILITIES
714
1,247
3,684
5,188
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 £2,632k (2016: £113k loss). There is no other
comprehensive income in the Parent Company.
The financial statements were approved and authorised for issue by the Board on 6
December 2017 and were signed on its behalf by:
Alan O’Brien
Chief Executive Officer
6 December 2017
The notes on pages 29 to 46 form part of these financial statements.
25
Consolidated and Company Cash Flow Statements
For the year ended 30 June 2017
Cash flows from operating activities
Loss before taxation
Adjustments for:
Depreciation and amortisation
Profit on disposal of property, plant and
equipment
Impairment of investment in subsidiary
Finance income
Transfers to equity reserves
Decrease/(increase) in trade and other
receivables
Decrease/(increase) in inventories
(Decrease)/increase in trade and other
payables
Group
2017
£’000
2016
£’000
Company
2017
£’000
2016
£’000
(1,651)
(1,620)
(2,632)
(113)
107
(3)
-
-
1
127
88
(60)
111
-
-
(2)
3
73
(14)
(65)
-
-
2,523
-
1
-
-
(20)
-
-
-
(2)
3
(26)
-
10
Cash used in operations
(1,391)
(1,514)
(128)
(128)
Corporation taxes recovered
30
-
-
-
Net cash outflow from operating activities
(1,361)
(1,514)
(128)
(128)
Cash flows from investing activities
Share issues
Investment in subsidiary
Purchase of property, plant and equipment
Proceeds on disposal of property plant and
equipment
Finance income
Net cash generated by/(used in)
investing activities
1,147
-
(1)
6
-
1,152
693
-
(117)
-
2
578
1,147
(1,220)
-
-
693
(1,303)
-
-
-
(73)
2
(608)
Net decrease in cash and cash equivalents
Cash and cash equivalents at the
beginning of the year
Cash and cash equivalents at the end of
the year
(209)
235
(936)
1,171
(201)
215
(736)
951
26
235
14
215
The impairment of the carrying value of the investment in subsidiary, as detailed in note 13,
is a significant non-cash transaction.
The notes on pages 29 to 46 form part of these financial statements.
26
Consolidated Statement of Changes in Equity
For the year ended 30 June 2017
Share
capital
Share
premium
£’000
£’000
Share
based
payment
reserve
£’000
Retained
earnings
Total
equity
£’000
£’000
1,650
22
165
118
1,955
Balance at 1 July
2015
Changes in equity
for year
Loss for the year
-
-
Share issue
550
143
-
-
3
(1,620)
(1,620)
-
-
693
3
-
-
2,200
165
168
(1,502)
1,031
Loss for the year
-
-
Share issues
331
816
(1,621)
(1,621)
-
1,147
-
-
1
-
-
-
-
-
1
-
(70)
70
2,531
981
99
(3,053)
558
Employee share
option scheme –
value of services
provided
Balance at 30 June
2016
Changes in equity
for year
Employee share
option scheme –
value of services
provided
Transfer to retained
earnings re lapsed
options
Balance at 30 June
2017
The notes on pages 29 to 46 form part of these financial statements.
27
Company Statement of Changes in Equity
For the year ended 30 June 2017
Share
capital
Share
premium
£’000
£’000
Share
based
payment
reserve
£’000
Retained
earnings
Total
equity
£’000
£’000
1,650
22
165
2,726
4,563
Balance at 1 July
2015
Changes in equity
for year
Loss for the year
-
-
Share issue
550
143
-
-
3
(113)
(113)
-
-
693
3
-
-
Employee share option
scheme – value of
services provided
Balance at 30 June
2016
Changes in equity
for year
Employee share option
scheme – value of
services provided
Transfer to retained
earnings re lapsed
options
Balance at 30 June
2017
2,200
165
168
2,613
5,146
-
-
1
(2,632)
(2,632)
-
-
1,147
1
-
(70)
70
-
-
-
-
2,531
981
99
51
3,662
Loss for the year
-
-
Share issue
331
816
The notes on pages 29 to 46 form part of these financial statements.
28
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.
29
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.
30
c)
d)
e)
f)
g)
h)
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
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.
Fixed asset investments: Fixed asset investments are stated at cost less any
provision for impairment in value.
Deferred consideration: Deferred consideration is discounted from the
anticipated settlement date at the Group’s weighted average cost of capital.
Inventories: Inventories are valued at the lower of average cost and net
realisable value.
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.
31
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.
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.
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.
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.
32
i)
j)
k)
l)
m)
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.
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’
33
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.
34
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.
At 30 June 2017
Trade and other
payables
At 30 June 2016
Trade and other
payables
Less than 1
year
£’000
Between 1
and 2 years
£’000
Between 2
and 5 years
£’000
Over 5
years
£’000
156
216
-
-
-
-
-
-
The Group does not have any derivative financial instruments.
35
(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.
36
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.
37
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.
38
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
UK
Other
Total
Year
ended 30
June 2017
Sales
revenue
£’000
305
204
509
Year
ended 30
June 2016
% of
total
revenue
60
40
100
Sales
revenue
£’000
775
104
879
% of
total
revenue
88
12
100
During the period, sales to the group’s largest customers were as follows:
Customer 1
Customer 2
Customer 3
Customer 4
Customer 5
5.
Operating loss
Operating loss is stated after charging/(crediting):
Depreciation of property, plant & equipment
Amortisation of intangible assets
Profit on disposal of property, plant and equipment
Operating lease rentals – land and buildings
Profit on foreign exchange
Cost of inventories recognised as an expense
6.
Investment revenue
Interest receivable
39
Sales
revenue
£’000
103
91
74
70
65
% of total
revenue
20
18
15
14
13
Year ended 30
June 2017
£’000
60
47
(3)
54
-
131
Year ended
30 June 2016
£’000
64
47
-
56
(3)
177
Year ended
30 June 2017
£’000
3
Year ended 30
June 2016
£’000
2
7.
Auditors’ remuneration
Fees payable to the Company’s auditors for:
- the audit of the Company’s annual accounts
Fees payable to the Company’s auditors for other
services to the Group:
- the audit of the Company’s subsidiary
Total audit fees
Fees payable to the Company’s auditors for:
- taxation compliance services
- other services
Total other fees
8.
Staff costs
Wages and salaries
Social security costs
Year ended
30 June 2017
£’000
Year ended 30
June 2016
£’000
10
18
28
5
5
10
10
16
26
4
2
6
Year ended
30 June 2017
£’000
1,199
129
1,328
Year ended 30
June 2016
£’000
1,180
135
1,315
The average monthly number of employees, including directors, during the year was as follows:
Directors
Administration
9.
Corporation tax
Current tax
Total tax credit for the year
Loss before tax
Tax on loss on ordinary activities at standard UK
corporation tax rate of 20% (2016: 20%)
Expenses not deductible for tax purposes
Depreciation in excess of capital allowances
Tax losses carried forward
Current tax
Year ended
30 June 2017
Nos.
5
18
23
Year ended 30
June 2016
Nos.
5
18
23
Year ended 30
June 2017
£’000
30
30
Year ended
30 June 2016
£’000
-
-
(1,651)
(1,620)
(330)
1
11
318
-
(324)
1
(9)
332
-
The tax credit represents the receipt of tax credits on qualifying R&D expenditure.
40
The tax charge for the year can be reconciled to the loss as follows:
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
Cost
At 1 July
Additions
Disposals
At 30 June
Depreciation
At 1 July
Charge for the year
Reversed on disposals
At 30 June
Net Book Value
At 30 June 2017
At 30 June 2016
2017
£’000
2016
£’000
313
1
(25)
289
192
60
(22)
230
59
121
206
117
(10)
313
138
64
(10)
192
121
68
The Company held no property, plant and equipment at 30 June 2017 and 2016.
41
12.
Intangible assets
Group
Intellectual Property
Cost
At 1 July and 30 June
Amortisation
At 1 July
Charge for the year
At 30 June
Net Book Value
At 30 June 2017
At 30 June 2016
2017
£’000
2016
£’000
943
943
482
47
529
414
461
435
47
482
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
Cost
At 1 July
Additions
At 30 June
Impairment provision
At 1 July
Charge for year
At 3 June
Net Book Value
At 30 June 2017
At 30 June 2016
2017
£’000
4,904
1,220
6,124
-
(2,523)
(2,523)
2016
£’000
3,601
1,303
4,904
-
-
-
3,601
4,904
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
Sabien
Technology IP
Limited
Northern
Ireland
Ordinary
42
Managing
carbon through
energy
reduction
Ownership of
Intellectual
Property
100%
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
Goods held for resale
2017
£’000
133
2016
£’000
221
The Company held no inventories at 30 June 2017 and 2016.
15.
Trade and other receivables
Trade receivables
Other receivables
Amounts owed by group undertakings
2017
Group
£’000
21
61
-
2016
2016
2017
Group Company Company
£’000
£’000
£’000
-
-
130
9
6
79
60
63
-
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:
Up to 3 months
3 to 6 months
More than 6 months
2017
£’000
20
1
-
21
2016
£’000
130
-
-
130
43
The carrying amounts of the Group’s trade and other receivables are denominated in the
following currencies:
Pounds sterling
Euros
16.
Cash and cash equivalents
Cash and cash equivalents
17.
Trade and other payables
Trade payables
Social security and other taxation
Accruals and deferred income
18.
Share capital
2017
£’000
66
16
82
2016
£’000
200
9
209
2017
Group
£’000
26
2016
2016
2017
Group Company Company
£’000
£’000
£’000
215
14
235
2017
Group
£’000
39
17
100
156
2016
2016
2017
Group Company Company
£’000
£’000
£’000
10
3
49
(10)
(11)
27
42
30
140
42
22
216
Allotted, called up and fully paid
110,254,867 New Ordinary shares of 0.5p each (2016: nil )
Ordinary shares of 5p (2016: 44,004,867)
44,004,867 Deferred shares of 4.5p each (2016: nil )
Total
2017
£’000
2016
£’000
551
-
1,980
2,531
-
2,200
-
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.
44
Share options (see note 20)
At the year end date, the following options had been granted:
Date of Grant
12 October 2007
1 April 2010
25 November 2010
31 October 2014
Total
At 1 July 2016
and 30 June
2017
100,000
330,694
91,743
35,000
557,437
Exercise
price
Exercisable
from
Exercisable to
50.0p
54.5p
54.5p
54.5p
October 2010
April 2013
October 2017
April 2020
November 2013 November 2020
October 2024
October 2017
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
Expiry date:
Within one year
Between two and five years
Land & buildings
2017
£’000
2016
£’000
60
30
90
60
149
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:
Share price at date of grant
Exercise price at date of grant
Weighted average fair value
Volatility
Expected life
Risk free interest rate
45
2017
-
54.5p
-
30%
3 years
4.75%
2016
39.0p
54.5p
5p
30%
3 years
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:
Weighted
average
exercise price
2017
Number
2017
Weighted
average
exercise price
2016
Number
2016
2,145,667
52.98
2,272,410
52.98p
-
-
-
-
(1,588,230)
-
(126,743)
-
557,437
53.70
2,145,667
52.98p
2.7 years
-
2.1 years
-
Balance at
beginning of the
financial year
Granted during
the year
Cancelled
during the year
Balance at end
of the financial
year
Weighted
average
remaining
contractual life
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.
46