TIDMSYM
RNS Number : 9220Y
Symphony Environmental Tech. PLC
09 March 2017
9 March 2017
SYMPHONY ENVIRONMENTAL TECHNOLOGIES PLC
("Symphony", the "Company" or "the Group")
The information communicated within this announcement is deemed
to constitute inside information as stipulated under the Market
Abuse Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is considered to be in the
public domain
Preliminary Results for the year ended 31 December 2016
Symphony Environmental Technologies Plc (AIM: SYM and NASDAQ
OTC: SEPTY), a global specialist in products and technologies that
"make plastic smarter", is pleased to announce its preliminary
results for the year ended 31 December 2016.
Highlights
-- Revenues increase by 6.8% to GBP6.80 million (2015: GBP6.37 million)
-- Gross profit increases by 16.3% to GBP3.41 million (2015: GBP2.93 million)
-- Operating profit before non-recurring costs of GBP0.20 million (2015: loss GBP0.97 million)
-- Non-recurring costs of GBP0.05 million (2015: GBP1.31 million)
-- Profit before tax of GBP0.12 million (2015: loss GBP2.30 million)
-- Profit after tax of GBP0.17 million (2015: loss GBP3.33 million)
-- Basic earnings per share of 0.11p (2015: loss per share 2.26p)
-- Operating performance ahead of market expectations
Post year-end
-- Launch of d2p anti-microbial gloves and UK product listing
-- Launch of d2p-treated water pipes
Nirj Deva DL, FRSA, MEP, Chairman of Symphony, said:
I am very pleased to report a profit before tax of GBP123,000.
This positive performance compares well with the loss of GBP2.3
million reported in 2015. This result was achieved by an increase
in revenues to GBP6.80 million (2015: GBP6.37 million) and
resultant 16.3% increase in gross profits to GBP3.41 million, but
in particular, a substantial reduction in overheads.
During the year, d2w continued to generate the majority of its
revenues in markets mainly outside of Europe. The political
momentum has been encouraging in several overseas territories where
governments aim to resolve the plastic litter crisis, as regularly
highlighted in the media. As communicated by me last year, the
opportunities for d2w oxo-biodegradable technology remain good even
though Symphony's investment levels in the technology have reduced.
d2w remains the only oxo-biodegradable technology to have an
Eco-label, a Life Cycle Assessment, and reports on Recycling
Studies, Bio-degradation and Eco-toxicity on land and in the sea.
d2w oxo-biodegradable technology fits well with the circular
economy as well as overall strategies to improve the
environment.
We also advised last year that your Board intended to focus more
on delivering products and technologies that will create value for
shareholders in the near term. For our d2p "designed to protect"
range, we have progressed significantly, and our suite of
technologies now includes anti-fungal, anti-bacterial, odour
absorber, insecticide and flame-retardants. We have now begun
commercialising d2p anti-microbial gloves and d2p anti-microbial
water pipes, with launches announced for early 2017. These product
developments have been the result of an extensive pipeline of
activities over the last three years, and we are planning further
technology commercialisations in the short term.
We have a valuable asset in our global distributor network and
are working with them and their customers to develop products as
well as selling the completed technologies through them.
The Board would like to thank its management, distributors and
staff for all their hard work over the last year and we look
forward to further progress in 2017.
N Deva DL FRSA MEP
Chairman
Contacts
Symphony Environmental Technologies
Plc
Michael Laurier, CEO Tel: +44 (0)
20 8207 5900
Ian Bristow, FD
Cantor Fitzgerald Europe
David Foreman/Michael Reynolds Tel: +44 (0)
(Corporate Finance) 20 7894 7000
David Banks (Sales)
Chief Executive's review
In the year under review we achieved an increase in sales, gross
and net profit - and all from a lower cost base. Sales of d2w
products continued to account for the greater part of turnover,
with the majority exported outside Europe in US and Euro
currencies.
d2w Controlled-life Plastic Technology
The Group has continued to invest in enhancing its credentials
for oxo-biodegradable plastic technology. Within the period, two
new international recycling studies were completed that further
evidenced that plastic products made with d2w could be safely
recycled with normal plastic, and are not harmful to the recycling
process nor to products made with the recycled raw material. An
additional two biodegradation studies were also completed that
showed that plastics made with d2w technology would safely and
harmlessly degrade and biodegrade in both the terrestrial and
marine environments. These further studies and reports are being
used when presenting d2w as a viable and credible option for
resolving the many issues caused by plastic leakage on land and
into the oceans. Plastic products made with d2w technology have
been proven not to leave micro-particles of plastics in the
environment - which is a major topic of concern.
The global momentum forcing change in current waste management
practices, together with a need to resolve plastic leakage into the
environment, has created more interest and opportunities for
products made with d2w controlled-life plastic technology. In both
corporate and political situations, Symphony has seen, and is
continuing to see, a substantial increase in activity.
d2p "Designed to Protect"
As reported in earlier announcements, Symphony has expanded its
product-offering to new and existing customers for its d2p
technologies.
We have more than 100 live projects in development with a wide
range of customers and potential customers from the majority of our
global distribution network. These projects include anti-fungal,
anti-bacterial, odour absorber, insecticide and flame retardant
masterbatches and finished products.
As previously advised, some of these technologies may require
regulatory clearance before commercial use in some countries, and
the Group is working hard to obtain these with our
distributors.
Trading results
Group revenues were 6.8% higher at GBP6.80 million (2015:
GBP6.37 million) with an increased gross profit margin at 50.1%
from 46.0% in 2015, driven mainly by a more profitable sales mix
and favourable currency movements. As a result, the contribution
from gross profit increased by 16.3% to GBP3.41 million from
GBP2.93 million in 2015.
Recurring administrative expenses decreased by 17.6% to GBP3.03
million (2015: GBP3.68 million) due to cost reductions as part of a
strategic review completed in early 2016. Non-recurring
administrative expenses of GBP0.05 million were incurred as part of
the implementation this review, following the non-recurring costs
in 2015 which were GBP1.31 million, and included a GBP1.28 million
impairment charge relating to development cost within intangible
fixed assets and GBP0.03 million relating to staff costs.
The Group's operating profit before non-recurring items was
GBP0.20 million - an improvement of more than GBP1.17 million
compared with 2015. Even when taking into account the non-recurring
items, the Group made an operating profit of GBP0.15 million in
2016 compared to an operating loss of GBP2.29 million in 2015. This
resulted in a profit before tax of GBP0.12 million in 2016 (2015:
loss GBP2.30 million).
The taxation credit of GBP0.05 million is in respect of a
Research and Development ("R&D") tax credit. The 2015 tax
charge of GBP1.03 million comprises a deferred tax asset impairment
of GBP1.14 million and an R&D tax credit of GBP0.11
million.
The Group therefore reports a profit for the year of GBP0.17
million (2015: loss GBP3.33 million) with basic earnings per share
of 0.11 pence (2015: loss per share 2.26 pence).
The Group's primary selling currency is the US Dollar and
therefore a strong dollar is beneficial for the Group. The Group
self-hedges where possible by purchasing in US Dollars, and has
banking facilities in place in order to secure rates going forward.
As at 31 December 2016, the Group had a net balance of US Dollar
assets totalling $0.91 million (2015: $0.82 million).
The Board has reviewed its policy on segmental reporting and now
consider there is ultimately just one operating segment as define
under IFRS8. This is as a result of no material costs being
incurred in Waste to Value projects over the last two accounting
periods, and having no plans to incur any material costs in that
segment going forward. Management reviews the performance of the
Group by reference to the total performance of the whole
business.
The Group expensed R&D costs of GBP514,000 in 2016 (2015:
GBP521,000).
Balance sheet and cash flow
The Group had net cash in the bank of GBP0.26 million at the
year-end (2015: GBP0.12 million) and consumed cash of GBP0.30
million from operations (2015: cash generated GBP0.02 million). The
increase in cash consumed was as a result of an increase in trade
receivables to GBP1.42 million as at 31 December 2016 (31 December
2015: GBP0.72 million). The increase in trade receivables was
primarily due to a change in terms for one of the Group's major
customers from letter of credit to 90-day open account, covered by
credit insurance.
The increase in trade receivables was funded by an increase in
the Group's trade finance facility to GBP0.63 million at 31
December 2016 (31 December 2015: GBP0.16 million). The Group has a
GBP1.50 million trade finance facility with HSBC Bank plc, and the
Board do not envisage any working capital constraints should sales
materially increase.
Outlook
Our expectations for the short term are that more countries
outside Europe will pass legislation in favour of a d2w-type
oxo-biodegrading plastic solution, and that other countries who
already have legislation will progress their enforcement programs.
If these expectations are met, then this should lead to an increase
in demand for our d2w products.
As mentioned earlier in this report, we have over 100
customer-led development projects for the wide range of d2p
technologies, for both masterbatches and finished products. A good
foundation has therefore been created to further increase revenues
and profitability going forward.
The Group's focus will continue to be the delivery of products
and technologies that create value in the near term for its
shareholders.
We expect to build on the positive momentum and are optimistic
for a successful year ahead, in an environment that is becoming
more receptive to our growing range of technologies and
products.
Michael Laurier, Chief Executive
Consolidated statement of comprehensive income
for the year ended 31 December 2016
2016 2015
Note GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ----- --------- -------- --------- ----------
Revenue 6,801 6,365
Cost of sales (3,395) (3,437)
Gross profit 3,406 2,928
Distribution costs (176) (221)
Administrative
expenses - recurring (3,031) (3,679)
Administrative
expenses - non-recurring (54) (1,313)
--------- ---------
Administrative
expenses (3,085) (4,992)
Operating profit/(loss)
- before non-recurring
items 199 (972)
Operating loss
- non-recurring (54) (1,313)
--------------------------- --------- ---------
Operating profit/(loss) 145 (2,285)
Finance costs (22) (16)
Profit/(loss) for
the year before
tax 123 (2,301)
Taxation 45 (1,031)
Profit/(Loss) for
the year 168 (3,332)
--------------------------- ----- --------- -------- --------- ----------
Total comprehensive
income for the
year 168 (3,332)
--------------------------- ----- --------- -------- --------- ----------
Basic earnings
per share 2 0.11p (2.26)p
Diluted profit/(loss)
per share 2 0.10p (2.26)p
--------------------------- ----- --------- -------- --------- ----------
All results are attributable to the parent Company equity
holders. There were no discontinued operations for either of the
above periods.
Consolidated statement of financial position
as at 31 December 2016
2016 2015
GBP'000 GBP'000
------------------------------ -------- --------
Assets
Non-current
Property, plant and
equipment 298 397
Intangible assets 62 73
360 470
Current
Inventories 416 477
Trade and other receivables 1,576 852
Cash and cash equivalents 437 122
2,429 1,451
Total assets 2,789 1,921
------------------------------- -------- --------
Equity
Equity attributable
to shareholders of
Symphony Environmental
Technologies plc
Ordinary shares 1,499 1,499
Share premium 3,533 3,533
Retained earnings deficit (3,971) (4,139)
Total equity 1,061 893
------------------------------- -------- --------
Liabilities
Non-current
Interest bearing loans
and borrowings 2 6
2 6
Current
Interest bearing loans
and borrowings 808 170
Trade and other payables 918 852
1,726 1,022
Total liabilities 1,728 1,028
------------------------------- -------- --------
Total equity and liabilities 2,789 1,921
------------------------------- -------- --------
These financial statements were approved by the Board of
Directors on 8 February 2017 and authorised for issue on 8 February
2017.
Consolidated statement of changes in equity
for the year ended 31 December 2016
Equity attributable to the equity holders of Symphony
Environmental Technologies plc:
Share Share Retained Total
capital premium earnings equity
deficit
GBP'000 GBP'000 GBP'000 GBP'000
----------------- --------- --------- ---------- ----------
For the year
to 31 December
2016
Balance at 1
January 2016 1,499 3,533 (4,139) 893
Loss and total
comprehensive
income for the
year - - 168 168
----------------- --------- --------- ---------- ----------
Balance at 31
December 2016 1,499 3,533 (3,971) 1,061
----------------- --------- --------- ---------- ----------
For the year
to 31 December
2015
Balance at 1
January 2015 1,446 3,077 (807) 3,716
Issue of share
capital 53 456 - 509
Transactions
with owners 53 456 - 509
----------------- --------- --------- ---------- ----------
Loss and total
comprehensive
income for the
year - - (3,332) (3,332)
----------------- --------- --------- ---------- ----------
Balance at 31
December 2015 1,499 3,533 (4,139) 893
----------------- --------- --------- ---------- ----------
Consolidated cash flow statement
for the year ended 31 December 2016
Note 2016 2015
GBP'000 GBP'000
------------------------------ ----- -------- --------
Operating activities
Net cash used in operations 4 (343) (80)
Tax received - R&D
tax credits 45 111
------------------------------ ----- -------- --------
Net cash (used)/generated
in operating activities (298) 31
Investing activities
Additions to property,
plant and equipment (8) (141)
Additions to intangible
assets (2) (212)
Proceeds from sale
of fixed assets 11 -
------------------------------ ----- -------- --------
Net cash generated/(used)
in investing activities 1 (353)
Financing activities
Repayments of borrowings - (650)
Movement in working
capital facility 464 15
Movement in finance
lease liability (4) 7
Proceeds from share
issue - 509
Interest paid (22) (16)
------------------------------ ----- -------- --------
Net cash generated/(used)
in financing activities 438 (135)
Net change in cash
and cash equivalents 141 (457)
Cash and cash equivalents,
beginning of year 117 585
Foreign exchange losses - (11)
Cash and cash equivalents,
end of year 258 117
------------------------------ ----- -------- --------
The reconciliation to the cash and cash equivalents as reported
in the statement of financial position is as follows:
2016 2015
GBP'000 GBP'000
------------------------------ --------- ---------
Loans and receivables:
Cash at bank and in
hand 437 122
Financial liabilities
measured at amortised
cost:
Bank overdraft (179) (5)
------------------------------- --------- ---------
Cash and cash equivalents,
end of year 258 117
------------------------------- --------- ---------
Notes to the Preliminary Statement
1 Basis of preparation
This preliminary statement has been prepared on the basis of
accounting policies consistent with the audited financial
statements for the year ended 31 December 2016.
The financial information set out in this report does not
constitute the Company's statutory accounts for the years ended 31
December 2016 or 2015 but is derived from the 2016 accounts.
Statutory accounts for 2015 have been delivered to the Registrar of
Companies and those for 2016 will be delivered in due course. The
auditor has reported on the financial statements for the year ended
31 December 2016; its report was (i) unqualified, (ii) did not
include a reference to any matters to which the auditor drew
attention by way of emphasis without qualifying the report and
(iii) did not contain a statement under section 498(2) or section
498(3) of the Companies Act 2006.
2 Earnings per share and dividends
The calculation of basic earnings per share is based on the
profit/(loss) attributable to ordinary shareholders divided by the
weighted average number of shares in issue during the year. The
calculation of diluted earnings per share is based on the basic
earnings per share, adjusted to allow for the issue of shares on
the assumed conversion of all dilutive options and warrants.
Reconciliations of the loss and weighted average numbers of
shares used in the calculations are set out below:
Basic and diluted 2016 2015
----------------------------- -------------- ---------------
Profit/(loss) attributable GBP168,000 GBP(3,332,000)
to equity holders of
the Company
----------------------------- -------------- ---------------
Weighted average number
of ordinary shares
in issue 149,939,377 147,616,172
----------------------------- -------------- ---------------
Basic earnings/(loss) 0.11 pence (2.26) pence
per share
----------------------------- -------------- ---------------
Dilutive effect of 15,794,717 -
weighted average options
and warrants
Total of weighted average
shares together with
dilutive effect of
weighted options 165,734,094 147,616,172
----------------------------- -------------- ---------------
Diluted earnings/(loss) 0.10 pence (2.26) pence
per share
----------------------------- -------------- ---------------
No dividends were paid for the year ended 31 December 2016
(2015: GBPnil). The effect of options and warrants in 2016 and 2015
are anti-dilutive.
A total of 24,456,500 options and warrants were outstanding at
the end of the year which may become dilutive in future years.
3 Segmental reporting
The Board has reviewed the requirements of IFRS 8 "Operating
Segments", including consideration of what results and information
the Board (the Chief Operating Decision Maker) reviews regularly to
assess performance and allocate resources, and concluded that all
revenue falls under a single business segment. The Directors
consider the business does not have separate divisional segments as
defined under IFRS 8. The Board assesses the commercial performance
of the business based upon a single set of revenues, margins,
operating costs and assets.
4 Net cash used from operations
2016 2015
GBP'000 GBP'000
------------------------------- --------- ---------
Profit/(loss) after
tax 168 (3,332)
Adjustments for:
Depreciation 86 101
Amortisation 13 29
Impairment of intangible
assets - 1,279
Loss on disposal of
tangible assets 10 14
Tax credit (45) (111)
Impairment of deferred
tax asset - 1,142
Interest expense 22 16
Changes in working capital:
Inventories 62 99
Trade and other receivables (724) 584
Trade and other payables 65 99
Cash used in operations (343) (80)
--------------------------------- --------- ---------
4 Availability of report and accounts
The Company will advise when copies of the Annual Report and
Accounts will be sent to shareholders and be available from the
Company's website www.symphonyenviornmental.com
NOTES TO EDITORS:
About Symphony Environmental Technologies plc
Symphony has developed a range of additives, concentrates and
master-batches marketed as d(2) p, which can be incorporated in a
wide variety of plastic and non-plastic products and applications,
so as to give them protection against many different types of
bacteria, fungi, algae, moulds, insects and fire.
In addition, Symphony has already developed and continues to
develop, controlled-life plastic technology which turns ordinary
plastic at the end of its service-life into biodegradable
materials. It is then no longer a plastic and can be bioassimilated
in the open environment in the same way as a leaf. The technology
is branded d(2) w(R) and appears as a droplet logo on many
thousands of tonnes of plastic packaging and other plastic products
around the world. In some countries oxo-biodegradable plastic is
mandatory. For a video of d(2) w(R) plastic degrading see
http://degradable.net/play-videos/4.
Symphony has also developed the d(2) Detector(R), a portable
device which analyses plastics and detects counterfeit products.
Symphony's d(2) t tagging and tracer technology is also available
for further security. See www.d2t.net
Symphony has a diverse and growing customer-base and has
established itself as an international business with 74
distributors around the world. Products made with Symphony's
plastic technologies are now available in 97countries and in many
different product applications. Symphony is certified to ISO9001
and ISO14001.
Symphony is a member of The Oxo-biodegradable Plastics
Association (www.biodeg.org) (OPA), the Society for the Chemical
Industry (UK), and the Pacific Basin Environmental Council.
Symphony actively participates in the Committee work of the British
Standards Institute (BSI), the American Standards Organisation
(ASTM), the European Standards Organisation (CEN), and the
International Standards Organisation (ISO).
Further information on the Symphony Group can be found at
www.symphonyenvironmental.com
.
This information is provided by RNS
The company news service from the London Stock Exchange
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