TIDMSYM
RNS Number : 3850O
Symphony Environmental Tech. PLC
09 February 2021
9 February 2021
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the Company's obligations under Article 17 of MAR. Upon the
publication of this announcement, this information is considered to
be in the public domain
SYMPHONY ENVIRONMENTAL TECHNOLOGIES PLC
("Symphony", the "Company" or the "Group")
Trading Update
Symphony Environmental Technologies Plc (AIM:SYM) global
specialists in supplying and developing technologies that make
plastic and rubber products "smarter, safer and sustainable", is
pleased to announce a trading update for the year ended 31 December
2020.
Highlights
Financial
-- Group revenue increased 19% to GBP9.8 million (2019: GBP8.2 million)
-- Further revenue of GBP0.7 million could not be recognised
during the year, as shipment missed Symphony's year end cut-off due
to Far East shipment congestion
-- Increases were seen across all main product areas:
2020 2019
d2w Masterbatch GBP7.3 million GBP7.1 million 2% increase
--------------- --------------- --------------
d2p Masterbatch GBP0.5 million GBP0.3 million 88% increase
--------------- --------------- --------------
Finished Products GBP1.8 million GBP0.6 million 200% increase
--------------- --------------- --------------
Other GBP0.2 million GBP0.2 million
--------------- --------------- --------------
-- Expected operating loss of GBP0.4 million (2019: GBP0.6 million)
-- Net cash and cash equivalents totalled GBP0.5 million as at
31 December 2020 (2019: GBP0.9 million)
Operational
-- FDA approves Symphony's d2p antibacterial technology for bread packaging
-- New Head of Sales and new Head of Procurement appointed
during the second half of 2020 to accelerate revenues
-- Reflecting further confidence in the Company's products,
investment has been made in the appointment of three new sales
professionals at the start of 2021
-- Enhanced spending to improve market penetration in key territories in Latin America
-- Unicamp university in Brazil, concluded that d2p
antimicrobial products act as a viricidal agent against coronavirus
within one hour of contact
-- d2p SYMFresh (food preservation technology) product launch
with major South African retailer
-- Commenced legal action against European Union for substantial damages
Financial
Group revenue for the year ended 31 December 2020 increased by
19% to GBP9.8 million (2019: GBP8.2 million). Further revenue of
GBP0.7 million missed the year end cut-off due to Far East shipment
congestion (gross profit contribution GBP0.2 million). Otherwise,
Group revenue would have exceeded GBP10.5 million, an increase of
30% on 2019.
Revenue growth was led by our strategic decision to grow
finished products (primarily PPE gloves) with year-on-year growth
of 200%, and d2p masterbatch, with year-on-year growth of 88%. d2w
growth was limited to 2% as some of Symphony's distributors
experienced continued severe COVID lockdowns.
Costs increased during the year by approximately GBP0.25m due to
a temporary increase in d2w Latin American market and regulatory
specialist costs together with EU legal action costs. These
short-term discretionary costs will continue into 2021, with market
advisory costs expected to fall away during the second half of the
year.
The Americas, as a whole, represent the largest revenue
generating area for the Group (in excess of 30% of Group revenues
in 2020 - the majority currently generated south of the US/Mexican
border). Market and regulatory specialists have been deployed in a
number of pivotal Latin American countries in order to address key
decision-makers and opinion-formers to improve the sales landscape
for the Group's innovative products.
In addition, the Company's wages and salary costs increased in
2020 due to the investment in the sales and other key functions of
the Group. The result of the above investments is that the
operating loss for the year is expected to be approximately GBP0.4
million (2019: GBP0.6 million).
2020 will show cash of GBP1.4 million being absorbed in
operations during the year due to working capital required for a
large proportion of 2020 Q4 revenue weighted in December 2020,
together with revenue held over into 2021 due to the
above-described cut-off. This resulted in a net cash position of
GBP0.5 million as at 31 December 2020 (2019: GBP0.9 million). The
Group has sufficient working capital and banking facilities to
enable it to implement its growth plans for 2021.
Operational
In order to accelerate the Group's commercial opportunities, a
new Head of Sales and new Head of Procurement were appointed during
the second half of 2020. Also, as a continuing enhancement of the
commercial structure, three new sales professionals have been
appointed in 2021 bringing in specific sales expertise in PPE,
large account specialities, and experience in plastic masterbatch
markets in South East Asia.
Accordingly, the Group has prepared a detailed Sales strategy
including the targeting of certain specific d2p opportunities (see
below), together with a plan to maximise our strategic PPE and
finished product potential.
The Group is actively looking to further complement the current
team with additional specialist resources.
d2p - designed to protect
Symphony's d2p pipeline is starting to show commercial traction.
Whilst the development of Symphony's antiviral technology was
driven by the current pandemic, there is strong demand, which is
expected to continue for influenza, corona-related, and other
viruses for years to come due to their apparent continued
mutation.
Governments, businesses, and societies need to work out how to
live with these epidemics. Symphony continues to believe that our
d2p technology can help break the transmission from person to
person through the inclusion of antimicrobial protection in
everyday items such as supermarket carrier bags, produce packaging,
and many other items which people touch, and therefore can form
part of a Government's multifaceted approach to reducing the impact
of viruses on societies.
Following receipt of further encouraging laboratory results
during the year for our FDA-approved formulation for antibacterial
bread packaging, we are making good progress with its
commercialisation, as a number of potential customers of this
technology have commenced their own commercial trials. We expect to
provide further updates during the second half of 2021.
Symphony's commercial suite of d2p additives include
anti-microbial and anti-viral, odour/ethylene adsorbers and
insecticidal technologies. Applications for these are set to grow
in 2021 to include, water pipes/tanks, irrigation pipes, car
components, electric cables, shopping bags, produce packs,
containers, mats, and face masks. Further applications are in our
sales pipeline.
Historically, many of the Group's product opportunities have
taken 6 months to several years to progress to product launch and
then to achieve commercial traction. Following receipt of antiviral
laboratory results in July 2020, our potential customers started
their own trials, and we anticipate that the lead-time for these to
go commercial should now be relatively short. More than 70% of the
Group's current commercial opportunities (by value) are for
antimicrobial and antiviral technologies.
The 88% increase in revenues from 2019 to 2020 demonstrate that
several of the initial projects are now live, and we anticipate a
continued commercialisation of the pipeline during this year
following completion of customer trials and contract
negotiations.
The Group continues to invest in R&D in order to enhance and
improve the current range of products where demonstrable commercial
opportunities exist.
Finished Products - PPE
Throughout 2020 the main issue with PPE was supply. We have
therefore improved our procurement function together with adding a
PPE sales specialist. The strategy is to focus on UK and European
opportunities for PPE incorporating d2p in the first instance,
while working with our active distributors globally where
opportunities arise.
Product will initially be delivered and sold without d2p whilst
customer and manufacturer structures are being developed. This may
take at least the first half of 2021 due to factory constraints
caused by current global demands, with sales growth still targeted
in the meantime.
Sales for SYMFresh, our food preservation consumer product, are
showing encouraging signs after a South African retailer commenced
the initial promotion.
d2w - biodegradable plastics
d2w sales were stable during 2020 compared with the prior year.
This was despite a number of territories facing severe COVID
lockdowns during the year. Additionally, one of our major
distributors held very low stocks at the end of 2020, and we expect
that situation to correct itself in early 2021.
EU action
As announced on 21 December 2020, Symphony commenced a legal
action against the institutions of the EU, having been advised by
three specialists in EU law that Article 5 of the Directive
2019/904 is unconstitutional. These institutions have until 7 March
2021 to serve their defence. At that point we will be able to
better understand timing and costs going forward. All the costs of
preparing the case have been paid, and any substantial further
costs would be incurred only if it went to trial. For further
information see Notes to Editors. The Group will provide updates as
appropriate.
Preliminary results for the year ended 31 December 2020 are
expected to be released in March 2021.
Enquiries
Symphony Environmental Technologies Plc
Michael Laurier, CEO Tel: +44 (0) 20 8207 5900
Ian Bristow, CFO
www.symphonyenvironmental.com
Zeus Capital Limited (Nominated Adviser and Joint
Broker)
David Foreman / Nick Cowles / Kieran Russell (Corporate Tel: +44 (0) 161 831 1512
Finance)
Dominic King / Victoria Ayton (Sales) Tel: +44 (0) 203 829 5000
Hybridan LLP (Joint Broker)
Claire Louise Noyce Tel: +44 (0) 203 764 2341
The person responsible for arranging the release of this
information is Michael Laurier, CEO of the Company.
NOTES TO EDITORS:
About Symphony Environmental Technologies plc
www.symphonyenvironmental.com
Symphony has developed a range of additives, concentrates and
master-batches marketed under its d2p(R) ("designed to protect")
trademark, which can be incorporated in a wide variety of plastic
and non-plastic products so as to provide protection against many
different types of microbes, and insects and rodents, and against
fire. d2p products also include odour, moisture and ethylene
adsorbers as well as other types of food-preserving technologies.
Symphony has launched d2p anti-microbial household gloves and
toothbrushes and is developing a range of other d2p finished
products for retail sale. See www.d2p.net
Symphony has developed and continues to develop and market, a
biodegradable plastic technology which helps tackle the problem of
microplastics by turning 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 a
similar way to a leaf. The technology is branded d2w(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,
including Saudi Arabia, Jordan, Bahrain and the UAE
oxo-biodegradable plastic is mandatory. See www.d2w.net
The Group has complemented its d2w biodegradable product range
with d2c "compostable resins and products" that have been tested to
US and EU composting standards.
Symphony has also developed the d2Detector(R), a portable device
which analyses plastics and detects counterfeit products. This is
useful to government officials tasked with enforcing legislation,
and Symphony's d2t tagging and tracer technology is available for
further security.
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 nearly 100 countries and
in many different product applications. Symphony itself is
accredited to ISO9001 and ISO14001.
Symphony is a member of The OPA (www.biodeg.org) and 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 Group can be found at
www.symphonyenvironmental.com and twitter @SymphonyEnv See also
Symphony on Instagram. A Symphony App is available for downloading
to smartphones.
EU Action
Article 5 of EU Directive 2019/904 purports to ban
oxo-degradable plastic, and whilst Symphony's d2w is
oxo-biodegradable, many people think that it is affected by the
ban. It does not however affect Symphony's range of d2p
technologies.
The EU has a well-established procedure, set out in the REACH
Regulation 2006/1907, for determining whether substances should be
banned. In December 2017, in compliance with the procedure, the EU
Commission requested the European Chemicals Agency ("ECHA") to
investigate its concerns regarding microplastics. Symphony
submitted scientific evidence to ECHA on oxo-BIOdegradable plastic
and on 30 October 2018 ECHA said that they were not convinced that
it created microplastics.
The Commission then made the extraordinary decision on 8 May
2019 to terminate ECHA's investigation and the EU proceeded to
impose a ban effective from 3 July 2021, citing microplastics as a
reason. Never before has an ECHA investigation been circumvented by
legislation.
Only if ECHA had recommended a restriction, supported by the
detailed dossier prescribed by Annex XV of REACH, the
recommendation would have had to be considered by two committees
under Articles 70 and 71 of REACH, and also by a stakeholder
consultation under Article 71(1), before any restriction could be
proposed. None of these procedures prescribed by EU law have been
complied with.
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