17:00 Fri 27 Sep 2019
Symphony Environment - Interim Results
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 information is considered to be in the public domain
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("Symphony", the "Company" or the "Group")
Interim Results
Financial highlights
· Revenues stable at
· Gross profit also stable at
· Adjusted EBITDA, before R&D and planned marketing, communications and brand costs of
· Reported loss before tax of
· Basic loss per share of
Post period-end
· Subscription for new shares raising
· Grupo Bimbo announces expansion of its biodegradable packaging programme and new packaging with Symphony's d2w brand
· New and first significant order for d2w agricultural grade
· New and first significant order for d2c "designed-to-compost" technology
· New legislation passed in
· Major launch of d2p Protector product in
Commenting on the results Nirj Deva, Chairman of Symphony, said:
I am pleased to report that further progress has been achieved in 2019 in a number of areas such as product development, government lobbying, branding, technical and the strengthening of our direct front-line sales force. As previously reported, the world is rethinking the way plastic is produced, used and disposed of, and is in many cases adopting technologies that are low cost and non-disruptive to manufacture, and that can be reused and recycled at the end of their useful life, without increasing CO2 emissions. The trend for change from ordinary plastics to materials less harmful to the environment is clearly evolving and we are seeing a sharp increase in activity from our global network of distributors, customers and potential customers, for many of our "making plastic smarter" technologies.
Users of plastics are being forced to make changes, either as a result of consumer pressure, or increasing legislative restrictions. We have seen companies having to adopt technology such as d2w to be able to continue exporting their plastic products to the
In the
As recently announced, Grupo Bimbo, the world's largest bread manufacture, has chosen to expand its use of biodegradable technology across a myriad of products and into many of the regions they operate in. Moreover, some of our Latin American distributors have seen a substantial increase in sales activity in recent weeks as a result of the market changes detailed above.
Having successfully completed d2p product evaluation trials, and with others nearing completion, we believe that we are entering into a new commercial phase for products such as anti-microbials, flame retardant and insecticides in the Middle Eastern, Asian, and Latin American markets.
Post period-end, our d2p technology was launched in
Revenues were
In conclusion, our sales pipeline is advancing well across a wide range of technologies which, with an increase in direct front-line sales, mean we remain confident of an improving performance over the coming months and into 2020.
Enquiries
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| Tel: +44 (0) 20 8207 5900 |
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| Tel: +44 (0) 20 7894 7000 |
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Tel: +44 (0) 203 764 2341 |
The person responsible for arranging the release of this information is
Chief Executive's review
I reported in our 2018 Annual Report and Accounts that the Board were of the opinion that Symphony was reaching a pivotal period in its development. We maintain this view albeit the increase in orders, particularly in the
For our d2w technology, legislation is changing globally in respect to short-life or single use packaging. Accordingly, increasing numbers of businesses are viewing oxo-biodegradable as a valuable technology. For example, Grupo Bimbo's d2w progress event on
We expect further progression of enforcement within
We have also continued to develop our d2w technology, with an agricultural grade finalised during the period and with commercial sales starting after the period end.
During the first half of this year, Symphony's d2w business inside the EU accounted for only 7.7% of revenues (H1-2018: 8.6%), and we believe that the EU Directive on "The reduction of the impact of certain plastics on the environment" and in particular, a restriction on oxo-degradable plastic, will have a limited effect on Symphony's business going forward. The Directive aims to ban plastic products that do not properly bio-degrade and are not recyclable, which is not the case for our d2w bio-degradable products, as confirmed by a former
As noted in the Chairman's statement, users of plastics are being forced to make changes, either as a result of consumer pressure, or increasing legislative restrictions. We are now seeing a rapid change in the market where users of ordinary plastics are having to switch to alternatives such as compostable or biodegradable technologies. The product choice is mostly dependent on national or local legislation, with some requiring a compostable type product, whilst others require a d2w type biodegradable product. We have therefore complemented our d2w biodegradable product range with d2c compostable resins and products. Since the period-end, the Group received an initial
For our d2p commercial products, further listings for anti-microbial gloves in some of the major Italian retailers was delayed resulting in d2p revenues being minimal for the period. However, we have now received orders post period-end together with a new listing in
Our current and developing d2p product technologies now include:
· Anti-microbial/anti-bacterial/anti-algae
· Flame retardant
· Anti-insect/slug/rodent/fouling
· Odour adsorber/ethylene adsorber/oxygen scavenger
· Vapour corrosion inhibitor
Financial results
Group revenue and gross profit for the first six months of 2019 were unchanged from last year at
We continued our investment strategy into product development, government lobbying, brand and technical support, and commenced strengthening our direct front-line sales force during the period. Distribution costs increased during the period due to the pattern of sales, and interest increased primarily due to a higher level of business under termed letters of credit which were discounted for cash on presentation. Administrative expenses increased slightly to
The Group has adopted IFRS 16 which requires lessees to account for leases 'on-balance sheet' by recognising a 'right-of-use' asset together with its respective lease liability. The date of initial application by the Group was
The nature of the expenses related to those leases have also now changed from
The Board has reviewed the underlying position of the business using the following Adjusted EBITDA calculation which takes account of significant R&D, communication, marketing and brand protection expenditure which has not yet had a significant effect on the current revenue performance of the Group:
£'000 | H1 2019 | H1 2018 |
Operating (loss)/profit | (39) | 18 |
Depreciation and amortisation | 45 | 46 |
R&D costs | 324 | 305 |
Communication, marketing and brand protection costs | 189 | 218 |
Adjusted EBITDA | 519 | 587 |
The effect of additional direct sales costs, distribution costs and interest charges as detailed above meant the Group made an operating loss for the period of
The loss per share for the period was
Balance sheet and cashflow
The Group had net borrowings of
Net cash of
The Group has an invoice discounting facility of
Eranova
The Board continues to evaluate investing in the Eranova project, which enables plastic to be made from algae. The key benefits of the Eranova technology are:
· using a natural renewable waste product which pollutes beaches;
· a non-food-based resource (compared to corn or potatoes); and
· higher yields per hectare due to the fast growing-rate of algae compared to food-crops.
This technology would complement Symphony's growing range of environmental packaging solutions.
Brexit
The Board has considered the possible effects of Brexit on the business, and at the current time believes that Brexit will not have a material impact on the operations, financial performance or future prospects of the Group. The principal reasons for this are the Group's global operations, and the fact that during the period 92.2% of the Group's revenues were generated outside the EU mainland (H1-2018: 86.5%). However, the Board continues to monitor the Group's operations in the
Outlook
We continue to believe that there is a strong global outlook for d2w technology underpinned by regulatory, legislative and market forces in our key markets of
Our expectations are for further d2p products to be commercialised in the short term and that new business will continue to evolve for our d2c bio-based and compostable product range.
The Board continues to believe that Symphony is at or nearing a pivotal point in its progression from mainly an R&D phase to a commercial phase and we very much look forward to updating the market on our progress for d2w, d2p and d2c technologies in due course.
Condensed consolidated interim statement of comprehensive income
| 6 months to | 6 months to | 12 months to |
| 30 June | 30 June | 31 December |
| 2019 | 2018 | 2018 |
| Unaudited | Unaudited | Audited |
| £'000 | £'000 | £'000 |
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Revenue | 4,090 | 4,117 | 8,802 |
Cost of sales | (2,069) | (2,167) | (4,676) |
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Gross profit | 2,021 | 1,950 | 4,126 |
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Distribution costs | (146) | (108) | (210) |
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Administrative expenses | (1,914) | (1,824) | (3,852) |
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Operating (loss)/profit | (39) | 18 | 64 |
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Finance costs | (47) | (11) | (26) |
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(Loss)/profit for the period before tax | (86) | 7 | 38 |
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Tax credit | - | 6 | 10 |
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(Loss)/profit for the period | (86) | 13 | 48 |
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Total comprehensive income for the period | (86) | 13 | 48 |
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Earnings per share: |
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Basic | (0.05) | 0.01p | 0.03p |
Diluted | (0.05) | 0.01p | 0.03p |
All results are attributable to the owners of the parent.
There were no discontinuing operations for any of the above periods.
Condensed consolidated interim statement of financial position
| At | At | At |
| 30 June 2019 | 30 June 2018 | 31 December 2018 |
| Unaudited | Unaudited | Audited |
| £'000 | £'000 | £'000 |
ASSETS |
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Non-current |
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Property, plant and equipment | 247 | 261 | 254 |
Right-of-use assets | 695 | - | - |
Intangible assets | 43 | 42 | 34 |
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| 985 | 303 | 288 |
Current |
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Inventories | 580 | 525 | 623 |
Trade and other receivables | 2,394 | 1,479 | 2,228 |
Cash and cash equivalents | 252 | 629 | 374 |
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| 3,226 | 2,633 | 3,225 |
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Total assets | 4,211 | 2,936 | 3,513 |
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EQUITY AND LIABILITIES |
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Equity |
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Equity attributable to owners of |
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Share capital | 1,546 | 1,543 | 1,543 |
Share premium account | 336 | 333 | 333 |
Retained earnings | 37 | 82 | 123 |
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Total equity | 1,919 | 1,958 | 1,999 |
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Liabilities |
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Non-current |
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Lease liabilities | 570 | - | - |
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Current |
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Borrowings | 620 | - | 454 |
Lease liabilities | 119 | - | - |
Trade and other payables | 983 | 978 | 1,060 |
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| 1,722 | 978 | 1,514 |
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Total liabilities | 2,292 | 978 | 1,514 |
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Total equity and liabilities | 4,211 | 2,936 | 3,513 |
Condensed consolidated interim statement of changes in equity
Equity attributable to the owners of
| Share capital | Share premium | Retained earnings | Total equity |
| £'000 | £'000 | £'000 | £'000 |
For the six months to |
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Balance at | 1,543 | 333 | 123 | 1,999 |
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Issue of share capital | 3 | 3 | - | 6 |
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Transactions with owners | 3 | 3 | - | 6 |
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Total comprehensive income for the period |
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(86) |
(86) |
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Balance at | 1,546 | 336 | 37 | 1,919 |
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For the six months to |
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Balance at | 1,516 | - | 67 | 1,583 |
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Issue of share capital | 27 | 333 | - | 360 |
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Share-based options | - | - | 2 | 2 |
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Transactions with owners | 27 | 333 | 2 | 362 |
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Total comprehensive income for the period |
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13 |
13 |
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Balance at | 1,543 | 333 | 82 | 1,958 |
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For the year to |
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Balance at | 1,516 | - | 67 | 1,583 |
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Issue of share capital | 27 | 333 | - | 360 |
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Share-based payments | - | - | 8 | 8 |
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Transactions with owners | 27 | 333 | 8 | 368 |
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Total comprehensive income for the period |
- |
- |
48 |
48 |
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Balance at | 1,543 | 333 | 123 | 1,999 |
Condensed consolidated interim cash flow statement
| 6 months to 30 June 2019 Unaudited | 6 months to 30 June 2018 Unaudited | 12 months to 31 December 2018 Audited |
| £'000 | £'000 | £'000 |
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Operating activities: |
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(Loss)/profit for the period after tax | (86) | 13 | 48 |
Depreciation | 37 | 38 | 81 |
Amortisation | 8 | 8 | 16 |
(Profit)/loss on disposal of tangible assets | (17) | - | 1 |
Foreign exchange | 3 | 40 | (8) |
Share-based payments | - | 2 | 8 |
Tax credit | - | (6) | (10) |
Interest paid | 31 | 11 | 26 |
Change in inventories | 43 | 42 | (55) |
Change in trade and other receivables | (166) | (497) | (1,223) |
Change in trade and other payables | (85) | 4 | 111 |
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Net cash used in operations | (232) | (345) | (1,005) |
Tax received | - | 6 | 10 |
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Net cash used in operating activities | (232) | (339) | (995) |
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Investing activities: |
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Additions to property, plant and equipment | (39) | (9) | (45) |
Proceeds from sale of property, plant and equipment | 26 | - | - |
Additions to intangible assets | (17) | (2) | (3) |
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Net cash used in investing activities | (30) | (11) | (48) |
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Financing activities: |
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Movement in working capital facility | 152 | - | 454 |
Discharge of finance lease liability | - | (1) | (2) |
Proceeds from share issue | 5 | 360 | 360 |
Interest paid | (31) | (11) | (26) |
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Net cash generated in financing activities | 126 | 348 | 786 |
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Net change in cash and cash equivalents | (136) | (2) | (257) |
Cash and cash equivalents, beginning of period | 374 | 631 | 631 |
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Cash and cash equivalents, end of period | 238 | 629 | 374 |
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Bank overdraft of |
Notes to the interim financial statements
1 Nature of operations and general information
These condensed interim consolidated financial statements ("interim financial statements" or "interim report") are for the six months ended
The financial information set out in this interim report does not constitute statutory accounts. The Group's statutory financial statements for the year ended
These interim financial statements have been prepared in accordance with the requirements of International Accounting Standard ("IAS") 34 "Interim Financial Reporting", and are presented in Pounds Sterling (£), which is the functional currency of the parent company. They have been prepared under the historical cost convention. They have also been prepared on the basis of the recognition and measurement requirements of International Financial Reporting Standards that are adopted by the
These interim financial statements were approved by the board on
2 Significant accounting policies
These interim financial statements have been prepared in accordance with the accounting policies adopted in the last annual financial statements for the year ended
IFRS 16 requires lessees to account for leases 'on-balance sheet' by recognising a 'right-of-use' asset together with its respective lease liability. The date of initial application by the Group was
The value of recognised 'right-of-use asset' as at
The nature of the expenses related to those leases have also now changed from
3 Seasonal fluctuations
The Group operates in many countries and in many different markets. There are therefore no formal or considered seasonal fluctuations affecting the operations of the Group.
4 Segmental analysis
The Board considers that the Group does not have separate operating segments as defined under IFRS 8.
5 Shares issued
Shares issued are summarised as follows:
Shares issued and fully paid |
| 6 months to 30 June 2019 | 6 months to 30 June 2018 | Year to |
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- beginning of period |
| 154,344,377 | 151,614,377 | 151,614,377 |
- issued during the period |
| 225,000 | 2,730,000 | 2,730,000 |
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Total equity shares issued and fully paid at end of period |
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154,569,377 |
154,344,377 |
154,344,377 |
6 Earnings per share and dividends
The calculation of earnings per share is based on the result attributable to ordinary shareholders divided by the weighted average number of shares in issue during the period.
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 dilutive options and warrants which were exercisable during the period.
Reconciliations of the results and weighted average numbers of shares used in the calculations are set out below:
Basic and diluted |
6 months to 30 June 2019 |
6 months to 30 June 2018 |
Year to |
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(Loss)/profit attributable to owners of the Company | | | |
Weighted average number of ordinary shares in issue |
154,522,528 |
151,920,953 |
152,877,898 |
Basic earnings per share |
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Dilutive effect of weighted average options and warrants | - | 9,278,488 | 9,585,716 |
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Total of weighted average shares together with dilutive effect of weighted options and warrants | 154,522,528 | 161,199,441 | 162,463,614
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Diluted earnings per share |
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No dividends were paid for the year ended
The effect of options and warrants for the six months to
7 Availability of Interim Financial Statements
Paper copies of the Interim Financial Statements will be sent to shareholders upon request. Shareholders will be able to download a copy of the Interim Financial Statements from the Group's website www.symphonyenvironmental.com. Further copies of the Interim Financial Statements will be available from the Company's Registered Office at 6 Elstree Gate,
NOTES TO EDITORS:
https://www.symphonyenvironmental.com
Symphony has developed and continues to develop, 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® and appears as a droplet logo on many thousands of tonnes of plastic packaging and other plastic products around the world. In some countries, most recently
The Group has complemented its d2w biodegradable product range with d2c "compostable resins and products" that have been tested to US and EU composted standards.
In addition, Symphony has developed a range of additives, concentrates and master-batches marketed under its d2p® ("designed to protect") brand, which can be incorporated in a wide variety of plastic and non-plastic products so as to give them protection against many different types of bacteria, fungi, algae, moulds, and insects, and against fire. d2p products also include odour, moisture and ethylene adsorbers as well as other types of food-preserving technologies. Symphony has also launched d2p anti-microbial household gloves and toothbrushes (most recently in
Symphony has also developed the d2Detector®, 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
Further information on the
This information is provided by RNS, the news service of the
Quick facts: Symphony Environmental Technologies PLC
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