Final Results

RNS Number : 3782J

Symphony Environmental Tech. PLC

30 March 2010

 



30 March 2010

SYMPHONY ENVIRONMENTAL TECHNOLOGIES PLC

Preliminary Results for the year to 31 December 2009

Maiden pre-tax profit

Symphony Environmental Technologies plc ("Symphony", the "Company" or the "Group"), the environmental plastics and waste-to-value Group, is pleased to announce its preliminary results for the year ended 31 December 2009.

Highlights

·   Revenues increased by 31% to £7.04 million (2008: £5.36 million)

·   Operating profit increased by £0.98 million to £0.83 million (2008: loss of £0.15 million)

·   Profit before tax increased by £1.04 million to £0.64 million (2008: loss of £0.40 million)

·   Profit after tax increased by 151% to £0.92 million (2008: £0.37 million)

·   Gross profit margins increased to 55% (2008: 44%)

·   Cash generated from operations increased by £1.21 million to £0.57 million (2008: cash consumed £0.64 million)

·   Basic earnings per share increased by 129% to 0.80p (2008: 0.35p)

·   Number of d₂w^® distributors increased from 45 to 50

·   ADR's now traded in New York

Michael Laurier, Chief Executive, commented:

"I am very pleased to report a maiden pre-tax profit as well as a second year of positive and increased earnings per share.

This achievement marks yet another major milestone for Symphony as sales and marketing activities continue to grow in established and also new markets.

The market opportunity for our products and technology is significant and we are delighted that these financial results prove that our business is very successful and scaleable. Our business is both legislation and demand driven which is presenting us with many new and exciting opportunities. Our growing distribution network provides us with a truly global reach whereby large international businesses are becoming increasingly aware of the benefits of our d₂w^® technology and products; not only for the environment but for their own brands.

On the back of these results and our current trading, Symphony's management view the future with confidence."

Contacts:

Symphony Environmental Technologies plc
Michael Laurier, CEO Ian Bristow, FD	Tel: [phone]
Allenby Capital Limited
Nick Naylor/James Reeve	Tel: [phone]
Threadneedle Communications Graham Herring/Josh Royston	Tel: [phone]

Symbol London. SYM.L

American Depositary Receipts ("ADR")

Symphony ADRs trade in the US on the OTC (Over The Counter) market under the symbol SETPY. The ADR to 1p ordinary share ratio is 1:100 and the CUSIP is 87156K104.  BNY Mellon acts as sponsored depositary for Symphony's ADR facility.

Further information on the Symphony Environmental Technologies Group of companies:

SYMPHONY ENVIRONMENTAL TECHNOLOGIES PLC considers itself a world leader in Controlled-life plastic technology and products - a system that works by a process called oxo-biodegradation.  The technology is branded d₂w^® and appears as a droplet logo on many thousands of tonnes of plastic packaging and other plastic products. 

Symphony has a diverse and growing customer-base and has established itself successfully as an international business. Products made with d₂w plastic technology can now be found in more than 90 countries around the world and in many different product applications.  Symphony is a member of the Oxo-biodegradable Plastics Association (www.biodeg.org), the Society for the Chemical Industry (UK), and the American Standards Organisation (ASTM).  Symphony is also a member of The US Save the Plastic Bag Coalition (http://www.savetheplasticbag.com/) and the British Brands Group. Symphony actively participates in the work of the British Standards Institute (BSI) and the European Standards Organisation (CEN).

Symphony also owns d₂p which is an anti-microbial technology that is used in most type of plastic product applications to help protect those products against bacteria and fungi growth.  Symphony is also developing innovative and cost-effective waste-to-value technology to convert plastics, tyres and other waste-streams into valuable products.

Further information on the Symphony Group can be found at www.d2w.net.

Chairman's Statement  

I am delighted to report these results which reflect the achievement of the goals set out in last year's Annual Report. Significant growth was achieved in Group revenue resulting in a maiden profit before tax of £0.64 million. The Group's debt position was reduced by £0.34 million to £1.01 million.

The aim for the next year is to build on the achievements to date whilst continuing to develop new markets. The Group has improved its technical facilities and increased its team to ensure that product development is continually advanced.

The Group is working closely with its distributors and will be investing in various marketing opportunities during the forthcoming year to ensure that revenue growth for d₂w^® controlled-life products is maximised.  These products show strong growth globally and are currently being sold into 90 countries.

Developments on Symphony Energy are progressing with the aim of commercialisation as soon as practical.

These impressive results reflect the efforts of all involved within the Group, whom I thank, and we look forward to building on this excellent foundation. I would like to congratulate and thank the many people associated with helping the Group become what it is today; a Group that is profitable, cash-flow positive and one that is in good position to capture a substantial part of the potentially large and developing oxo-biodegradable plastics market. Thank you also to our many loyal shareholders and staff who have worked tirelessly over the years and have supported the management team since inception. It is due to this remarkable and long standing effort, that our technology, the d₂w^® brand, is visible in more than 90 countries worldwide, and this in itself is an achievement with no parallels by any other firm in this industry sector.

N Deva FRSA DL MEP

Chairman

Chief Executive's Review 

During 2009 the Company continued to concentrate its resources on the d₂w^® products with further launches in South America and new launches in North Africa, the Middle East and parts of Eastern Europe. The Group has continued to invest in research and development for new products together with improvements to existing products as well as testing and compliance protocols.

Costs have been carefully monitored with increases to support the growth in revenues. The Group has reduced its interest bearing debt by £0.34 million leading to a reduction in finance costs. This reduction in debt was limited due to a substantial increase in trade toward the end of the last quarter resulting in higher working capital balances reported at the end of the year, including amounts payable on invoice discounting.

Working with our distributors, we continue to monitor and have an influence on legislation in certain parts of the world and we are making considerable efforts to maximise awareness of d₂w^® products.

These reported figures reflect the impact of the considerable work and investment being made as well as the achievements to date in expanding sales and markets for d₂w^® controlled-life plastic technology and products.

Trading results

I am pleased to report Group revenues increased by 31% during the year from £5.36 million to £7.04 million. Group gross profit margins increased from 44% to 55%. These factors resulted in a 63% increase in the contribution from gross profit from £2.37 million in 2008 to £3.88 million in 2009.

The Group made an operating profit of £0.83 million compared to an operating loss of £0.15 million in 2008, resulting in the Group's maiden profit before tax of £0.64 million compared to a loss before tax of £0.40 million in 2008. 

Development costs of £0.23 million were capitalised in 2009. A £0.01 million research and development tax credit was received during the year.

The Symphony Environmental Limited d₂w^® division made a profit before taxation of £0.98 million and has recognised further deferred tax credit resulting in a carried forward deferred tax asset of £0.99 million at the end of the year. Losses within the non-degradable division reduced to £0.16 million in 2009 compared to a loss of £0.47 million in 2008.

The Group primary selling currency is the US Dollar. The Group 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 2009 the Group had a net balance of US Dollar assets totalling $1.29 million.

As a result of this financial performance, the Group reports a profit for the year of £0.92 million with basic earnings per share increasing to 0.80 pence (2008: 0.35 pence)

Cashflow

The Group has recorded an improvement in cash-flow of £1.21 million from 2008 by generating £0.57 million from operations (2008: £0.64 million loss). £0.04 million was invested in plant and equipment together with £0.23 million in product development which has been capitalised. Further research and development spend is included within expenses and was not capitalised as it does not meet the appropriate accounting criteria.

Debt was reduced by £0.34 million in 2009. The amount payable on the invoice discounting facility increased from £0.16 million in 2008 to £0.32 million in 2009. This was due to increased revenues in the last quarter of 2009 resulting in high levels of amounts receivable and hence financeable at the end of the year.

The Headstart loan has been repaid in accordance with the terms renegotiated in January 2009. At 31 December 2009 the balance of the loan was £40,000. This has been settled in full since the year end.

Invoice financing and banking facilities remain in place for 2010 which together with the current trade profile show adequate resources are available for the foreseeable future.

Operations

Total costs increased in 2009 due to the level of support required to service the growth in revenue and number of distributors.

Having developed a strong distributor base, the main function for the Group continues to be product support and development, marketing and brand-recognition.

On 19 March 2010 the Group moved its head office within Borehamwood UK to premises more suited for the next five to ten years of operations.

Symphony Energy

The Group currently absorbs annual running costs of £0.18 million. The RuPERT project is in its second year out of three and the Group is actively pursuing commercial outlets for the elements within the project.

Outlook

As stated above, the Group has moved its global headquarters to a modern facility that is more than twice the size of the Group's original premises as a result of the growth in activities.  Further investments will be made in technical support services, research and development, and also marketing activities. These investments, which are essential to a growing business of our size, will be undertaken carefully so as not to materially undermine short term expectations.

The Symphony distributor network has a busy year ahead with exhibitions, product development and other related projects on a global basis.  So far in 2010, d₂w^® representatives have participated in six major events.  In the coming months, we will be at The Master Investor Show, London; Chinaplas 2010 Plast, China; exhibitions in Central America and  Latin America, and towards the end of the year at one of the world's largest plastic events in Germany; the K Trade Fair. Product launches and other events are planned for the UK and other markets in the coming months. Details of these events will be communicated through our normal commercial channels.

The current year has started well and in line with management's expectations. The Board is confident that further expansion will be achieved during this year and that long term debt will continue to reduce.

Michael Laurier 

Chief Executive

Consolidated statement of comprehensive income

for the year ended 31 December 2009

		2009		2008
	Note	£'000	£'000	£'000	£'000
Revenue			7,038		5,355
Cost of sales			(3,163)		(2,981)
Gross profit			3,875		2,374
Distribution costs			(129)		(111)
Administrative expenses -  recurring		(2,914)		(2,358)
Administrative expenses -  non-recurring		-		(53)
Administrative expenses			(2,914)		(2,411)
Operating profit/loss -  recurring		832		(95)
Operating profit/loss -  non-recurring		-		(53)
Operating profit/(loss)			832		(148)
Finance income			-		1
Finance costs			(194)		(251)
Profit/(loss) for the year before tax			638		(398)
Tax credit			285		766
Profit for the year			923		368
Total comprehensive income for the year			923		368
Basic earnings per share	3		0.80p		0.35p
Diluted earnings per share	3		0.78p		0.32p

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 (balance sheet)

as at 31 December 2009

		2009	2008
		£'000	£'000
Assets
Non-current
Property, plant and equipment		216	241
Intangible assets		487	272
Deferred income tax asset		993	719
Available for sale financial assets		15	15
		1,711	1,247
Current
Inventories		212	194
Trade and other receivables		1,597	1,236
Cash and cash equivalents		34	92
		1,843	1,522
Total assets		3,554	2,769
Equity
Equity attributable to shareholders of Symphony Environmental Technologies plc
Ordinary shares		1,165	1,087
Share premium		13,253	13,176
Other reserves		822	822
Retained earnings		(13,447)	(14,383)
Total equity		1,793	702
Liabilities
Non-current
Interest bearing loans and borrowings		274	289
		274	289
Current
Interest bearing loans and borrowings		731	1,055
Trade and other payables		756	723
		1,487	1,778
Total liabilities		1,761	2,067
Total equity and liabilities		3,554	2,769

 

Consolidated statement of changes in equity

Equity attributable to the equity holders of Symphony Environmental Technologies plc:

	Share capital	Share premium	Other reserves	Retained earnings	Total equity
	£'000	£'000	£'000	£'000	£'000
For the year to 31 December 2009
Balance at 1 January 2009	1,087	13,176	822	(14,383)	702
Issue of share capital	78	77	-	-	155
Employee share based options	-	-	-	13	13
Transactions with owners	78	77	-	13	168
Profit and total comprehensive income for the year	-	-	-	923	923
Balance at 31 December 2009	1,165	13,253	822	(13,447)	1,793
For the year to 31 December 2008
Balance at 1 January 2008	1,018	13,048	822	(14,763)	125
Issue of share capital	69	128	-	-	197
Employee share based options	-	-	-	12	12
Transactions with owners	69	128	-	12	209
Profit and total comprehensive income for the year	-	-	-	368	368
Balance at 31 December 2008	1,087	13,176	822	(14,383)	702

Consolidated cash flow statement

for the year ended 31 December 2009

		2009	2008
	Note	£'000	£'000
Operating activities
Cash generated/(consumed) in operations	4	566	(635)
Tax received		11	48
Net cash generated/(consumed) in operations		577	(587)
Investing activities
Additions to property, plant and equipment		(44)	(89)
Proceeds from disposals of property, plant and equipment		-	11
Additions of intangible assets		(230)	(109)
Interest received		-	1
Net cash used in investing activities		(274)	(186)
Financing activities
Proceeds from loans		-	512
Repayment of loans		(319)	(62)
New finance leases		-	42
Discharge of finance lease liability		(31)	(43)
Proceeds from share issue		155	140
Interest paid		(194)	(205)
Net cash (consumed)/generated in financial activities		(389)	384
Net change in cash and cash equivalents		(86)	(389)
Cash and cash equivalents, beginning of year		18	407
Cash and cash equivalents, end of year		(68)	18

The reconciliation to the cash and cash equivalents as reported in the balance sheet is as follows:

		2009 £'000	2008 £'000
Loans and receivables:
Cash at bank and in hand		34	92
Financial liabilities measured at amortised cost:
Bank overdraft		(102)	(74)
Cash and cash equivalents, end of year		(68)	18

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 2009, except with regard to IAS1 and IFRS8.

The financial information set out in this preliminary announcement does not constitute statutory accounts for the years ended 31 December 2009 or 2008. The financial information for the year ended 31 December 2008 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified and did not contain a statement under s237(2) or (3) of the Companies Act 1985. The statutory accounts for the year ended 31 December 2009 will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the Registrar of Companies.

2              Segmental information

Management currently identifies the group's three service lines as operating segments. The activities undertaken by the degradable segment includes the sale of degradable products. The non-degradable segment includes the supply of non-degradable products to external customers. The waste to value segment includes all activities involved in the development of waste to energy systems. These operating segments are monitored and strategic decisions are made on the basis of adjusted segment operating results excluding one-off items such as employee settlement costs.

The segmental results for the year ended 31 December 2009 are as follows:

Business segments		Degradable d2w®	Non-degradable	Waste to value	Group
12 months to 31 December 2009		£'000	£'000	£'000	£'000
Segment revenues		6,947	91	-	7,038
Share based payments		(9)	(4)	-	(13)
Apportioned costs		(5,956)	(249)	(182)	(6,387)
Profit/(loss) for the year before tax		982	(162)	(182)	638
Taxation		285	-	-	285
Profit/(loss) for the year		1,267	(162)	(182)	923

The segmental results for the year ended 31 December 2008 are as follows:

Business segments		Degradable d2w®	Non-degradable	Waste to value	Group
12 months to 31 December 2008		£'000	£'000	£'000	£'000
Segment revenues		5,127	228	-	5,355
Share based payments		(12)	-	-	(12)
Apportioned costs		(4,919)	(697)	(125)	(5,741)
Profit/(loss) for the year before tax		196	(469)	(125)	(398)
Taxation		766	-	-	766
Profit/(loss) for the year		962	(469)	(125)	368
Non-recurring items in above		13	40	-	53
Profit/(loss) for the year before non-recurring items		975	(429)	(125)	421

Revenues stated are from external customers.

There were no inter-segment revenues for the above periods.

There has been no change in the basis of segmentation since the last annual financial statements.

3          Earnings per share and dividends

The calculation of basic earnings per share is based on the profit 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 profit and weighted average numbers of shares used in the calculations are set out below:

Basic and diluted		2009	2008
Profit attributable to equity holders of the Company		£923,000	£368,000
Weighted average number of ordinary shares in issue		115,767,185	105,628,745
Basic earnings per share		0.80 pence	0.35 pence
Dilutive effect of weighted average options and warrants		2,424,588	7,719,605
Total of weighted average shares together with dilutive effect of weighted options and warrants		118,191,773	113,348,350
Diluted earnings per share		0.78 pence	0.32 pence

No dividends were paid for the year ended 31 December 2009 (2008: £Nil).

4              Cash generated from operations

			2009 £'000	2008 £'000
Profit  after tax			923	368
Adjustments for:
Depreciation			69	33
Amortisation			15	14
Loss on disposal			-	5
Share based payments			13	12
Tax credit			(285)	(766)
Interest income			-	(1)
Interest expense			194	251
Changes in working capital:
Inventories			(18)	39
Trade and other receivables			(362)	(475)
Trade and other payables			17	(115)
Cash generated/(consumed) in operations			566	(635)

5          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.symphonyplastics.com

 

END

 

 

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