Boiler optimisation firm Sabien Technology Group Plc (LON:SNT) is making headway with its revised sales strategy.
Last summer, the AIM firm revealed it aimed to speed up its sales process by waiving around £20,000 of charges on client pilot programmes in a bid to bag larger contracts faster - such as with governments.
Investment now upfront
It acknowledged however this would mean further investment and cost, including recruiting more technical and sales staff, and that its efforts would take at least 12 months to start showing through.
Sabien sells monitors (called M2G) in the private and public sector that are fitted retrospectively to boilers, so they function more effectively, leading to savings of 15-25% per heating season (October to April). For a large building, savings on heating costs could add up to tens of thousands of pounds.
The M2G product, so far used by 150 customers, is proven to reduce carbon emissions and energy consumption with typical payback in less than two years.
It also sells something called M1G, which is technology designed to reduce operating costs in direct-fired water heaters.
Placing will fund 2017 expansion
Traction is clearly growing as in July Sabien said its sales pipeline had risen to £12.5mln or double the amount a year ago.
To fund this, in September, Sabien raised £750,000 through a placing at 4p per share.
The cash would allow for the the installation of 40 M2G pilot projects in 2017, compared to 35 this year, and also to develop EndoTherm, an energy reducing commercial heating additive said Alan O'Brien, chief executive.
“We successfully achieved our target of signing up to 35 M2G pilots in FY2016 and, in line with expectations we plan to run up to 40 M2G pilots in FY2017.
“These include some more in the USA where we supported our distributor in running a number of successful pilots last year.
“Additionally, we will be piloting the EndoTherm product for which we recently obtained an exclusive 10-year licence for distribution to the multi-site commercial heating market in the UK."
Results lag pipeline
Annual numbers have yet to reflect the growing pipeline.
Sales in the half year to December were still only nominal at £321,000 with a half-year loss of £983,000.
But with the new sales strategy and the growing order backlog, O’Brien is confident enough to pencil in financial year 2017/2018 as the time when Sabien moves into the black.
As the market value of the business is just £1.6mln currently it wouldn’t take much to move the dial for the share price.
Given the level sales so far, that rating is probably fair enough but the growing pipeline suggests momentum is building and conversion of just a moderate amount into hard revenues could see the picture change markedly.
--updates for funding in September--