Interim Results

RNS Number : 8114Y

Symphony Environmental Tech. PLC

10 September 2009

 



10 September 2009

SYMPHONY ENVIRONMENTAL TECHNOLOGIES PLC

Interim Results

Symphony Environmental Technologies plc ('Symphony' or 'Group'), the environmental plastics and waste-to-energy Group, is pleased to announce its interim financial statements for the six months ended 30 June 2009.

Highlights

Financial

 

·         Revenue increased by 60% to £3.69 million (2008 H1: £2.30 million)

·         Gross profits increased by 108% to £2.02 million (2008 H1: £0.98 million)

·         Gross profit margins increased to 55% (2008 H1: 42%)

·         Profit after tax £0.40 million (2008 H1: loss £0.17 million)

·         Basic earnings per share 0.35 pence (2008 H1: loss per share 0.16 pence)

·         Group debt reduced by £0.52 million since 31 December 2008

 

 

Operating

·         Launch of d2w in Lebanon

·         Launch of first d2w degradable metalised snack food films

·         Number of distributors increased to 48 (2008 H1: 38)

Post period end

• New d2p antimicrobial technology launched

Commenting on the results Nirj Deva, Chairman of Symphony said:

'We are pleased to announce a maiden first-half pre-tax profit together with significant cash generation and Group debt reduction.

This is an excellent set of results which confirms that the Group's commercial strategy is working. The management team has successfully driven the business forward since strategy changes were embarked on more than two years ago and the Board is looking to the future with confidence.

Our success is built on our global distribution network which now spans five continents and covers over 70 countries. The potential for increasing market-penetration year by year in each of these regions is vast, having established the infrastructure, the right commercial relationships, and the dedicated people on the ground.'

For further information, please contact:

Symphony
Michael Laurier, CEO	Tel: [phone]
Ian Bristow, FD
Allenby Capital
Rod Venables / James Reeve	Tel: [phone]
Threadneedle Communications
Graham Herring / Alex White	Tel: [phone]

Further information on the Symphony Environmental Technologies Group of companies:

SYMPHONY ENVIRONMENTAL TECHNOLOGIES PLC is a world leader in Controlled-life plastic technology - 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 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 be found in more than 70 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 continues to participate in the work of the British Standards Institute (BSI), and the European Standards Organisation (CEN).

Symphony has just launched d2p anti-microbial technology which has applications in similar markets to d2w®.

Symphony is also developing innovative waste-to-energy technology and cost-effective processes to convert plastics, tyres and other waste-streams into valuable products. 

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

Chief Executive's review

I am very pleased to present our first period of profit before tax. Substantial growth in revenues and gross margins have led to increased cash generation which has allowed us to invest further into research and development, as well as product-testing and marketing and to reduce Group debt.

Cash generated from operations amounted to £0.69 million compared to a cash-burn of £0.64 million for the same period last year.

Our marketing strategy and global distribution network is creating many valuable opportunities for d2w technology. New and repeat orders are increasing in many of our existing, as well as new, territories. During the period we announced the launch of d2w in Lebanon as well as the first application of d2w for metalised snack food films.

Trading results

Total revenue increased by 60% for the first six months of 2009 to £3.69 million compared to £2.30 million for the first six months of 2008.  d2w revenue increased by 73% to £3.64 million (2008 H1: £2.11 million). Gross profit was £2.02 million compared to £0.98 million, an increase of 108%. Gross profit margins increased to 55% from 42% for the same period last year.

Administrative expenses increased by 39% to £1.49 million (2008 H1: £1.07 million). This also represents an increase of 11% when compared to the second half of 2008. The increases are due to significant improvements in our test facility, and staff enhancements for research and development, marketing and training. 

The Group achieved a net profit before tax of £0.40 million compared with a loss before tax for the same period last year of £0.17 million.

Earnings per share increased to 0.35 pence (2008 H1: loss per share of 0.16 pence).

Cashflow

The Group's interest bearing debt was reduced by £0.52 million during the period. £0.14 million of this was financed by the issue of shares, and the rest was out of cash generated from operations.

The Headstart convertible loan was reduced from £0.38 million to £0.16 million and it will be fully repaid by early 2010. The Eximbank loan of £0.13 million was repaid in full during the period.

The Group uses Davenham Trade Finance to discount some of its invoicing. The balance on this facility reduced by £0.15 million during the period due to the efficient collection of receivables. Our policy is to keep as short as possible the timing of cash generation from receivables.  The Davenham facility helps to smooth out cash flow when the working capital cycle requires it.

Markets and brand

The markets for d2w plastics over the period have continued to develop. We are working with many large multinational corporations and anticipate reaching the point of commerciality with more of them following extensive trial and due-diligence periods. In line with our previously stated policy, any news flow from these projects will only be released in line with AIM rules. 

Plastic carrier bag campaigns and changes to legislation are helping to keep interest for d2w at a high level and the media is also elevating the plastic pollution topic. This growing awareness is helping to focus consumers' attention on the many alternative solutions. Symphony's d2w is often written about in the media and Symphony is recognised as an authority on the subject.

The 'Rupert' waste to energy project continues to develop at a satisfactory and expected rate. The ultra-high-pressure water system is nearing completion and the proto-type will soon be used for demonstration purposes. At this point our global network will commence marketing. Further announcements will be made in due course.

Outlook 

Since the end of the period we have launched d2p anti-microbial technology for inclusion into the plastic product manufacturing process. This is similar to how d2w technology is currently applied. We have so far had favourable feedback from our distributors and look forward to d2p adding a positive contribution to revenues going forward. There is a growing demand for technologies like d2p in many of the countries in which the Group operates. The potential markets and customers will be much the same as for d2w and it is also in line with the Group's strategy of product diversity.

The Group is now trading profitably and as a result is able to manage its trading cash-flow within its current facilities. In addition we expect to be able to continue with the research and development investment programme for both the plastic and the waste-to-energy divisions. We are also anticipating further investment into sales and marketing as well as continuing with the overall debt-reduction programme. 

We are very pleased with the progress made so far this year and remain optimistic for the future.

Michael Laurier

Chief Executive

 Condensed consolidated interim statement of comprehensive income

	6 months to 30 June  2009 Unaudited		6 months to 30 June  2008 Unaudited		12 months to 31 December 2008
						Audited
	£'000	£'000	£'000	£'000	£'000	£'000
Revenue		3,685		2,303		5,355
Cost of sales		(1,661)		(1,328)		(2,981)
Gross profit		2,024		975		2,374
Distribution costs		(58)		(54)		(111)
Administrative expenses:
- recurring	(1,485)		(1,067)		(2,358)
- non - recurring	-		-		(53)
Total administrative expenses		(1,485)		(1,067)		(2,411)
Operating profit /(loss)		481		(146)		(148)
Finance income		-		-		1
Finance costs		(79)		(21)		(251)
Profit / (loss) for the period before tax		402		(167)		(398)
Tax credit		-		-		766
Profit/(loss) for the period		402		(167)		368
Total comprehensive income for the period		402		(167)		368
Earnings per share:
Basic		0.35p		(0.16)p		0.35p
Diluted		0.30p		(0.16)p		0.32p

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 (balance sheet)

	At	At	At
	30 June  2009	30 June  2008	31 December  2008
	Unaudited	Unaudited	Audited
	£'000	£'000	£'000
Assets
Non-current
Property, plant and equipment	250	207	241
Intangible assets	320	198	272
Deferred income tax assets	719	-	719
Available for sale financial assets	15	15	15
	1,304	420	1,247
Current
Inventories	238	207	194
Trade and other receivables	1,080	1,056	1,236
Cash and cash equivalents	122	7	92
	1,440	1,270	1,522
Total assets	2,744	1,690	2,769
Equity
Equity attributable to owners of Symphony Environmental Technologies plc
Share capital	1,162	1,052	1,087
Share premium account	13,243	13,071	13,176
Other reserves	822	822	822
Retained earnings	(13,981)	(14,930)	(14,383)
Total equity	1,246	15	702
Liabilities
Non-current
Interest bearing loans and borrowings	28	29	289
	28	29	289
Current
Interest bearing loans and borrowings	737	1,036	1,055
Trade and other payables	733	610	723
	1,470	1,646	1,778
Total liabilities	1,498	1,675	2,067
Total equity and liabilities	2,744	1,690	2,769

Condensed consolidated interim statement of changes in equity

Equity attributable to the owners of Symphony Environmental Technologies plc:

	Share capital	Share premium	Other reserves	Retained earnings	Total equity
	£'000	£'000	£'000	£'000	£'000
For the six months to 30 June 2009
Balance at 1 January 2009	1,087	13,176	822	(14,383)	702
Net result for the period	-	-	-	402	402
Total comprehensive income for the period	-	-	-	402	402
Shares issued	75	67	-	-	142
Balance at 30 June 2009	1,162	13,243	822	(13,981)	1,246
For the six months to 30 June 2008
Balance at 1 January 2008	1,018	13,048	822	(14,763)	125
Net result for the period	-	-	-	(167)	(167)
Total comprehensive income for the period	-	-	-	(167)	(167)
Shares issued	34	23	-	-	57
Balance at 30 June 2008	1,052	13,071	822	(14,930)	15
For the year to 31 December 2008
Balance at 1 January 2008	1,018	13,048	822	(14,763)	125
Net result for the year	-	-	-	368	368
Total comprehensive income for the year	-	-	-	368	368
Share based payments	-	-	-	12	12
Shares issued	69	128	-	-	197
Balance at 31 December 2008	1,087	13,176	822	(14,383)	702

Condensed consolidated interim statement of cash flows

	6 months to 30 June  2009	6 months to 30 June  2008	12 months to 31 December  2008
	£'000	£'000	£'000
Operating activities:
Results for the period after tax	402	(167)	368
Depreciation	34	16	33
Amortisation	7	5	14
Loss on disposal	-	-	5
Share-based payments	-	-	12
Tax credit	-	-	(766)
Interest income	-	-	(1)
Interest expense	79	21	251
Change in inventories	(44)	26	39
Change in trade and other receivables	156	(295)	(475)
Change in trade and other payables	56	(247)	(115)
Cash generated/(consumed) in operations	690	(641)	(635)
Tax received	-	-	48
Net cash generated/(consumed) in operations	690	(641)	(587)
Investing activities:
Additions to property, plant and equipment	(43)	(22)	(89)
Proceeds from disposals of property, plant and equipment	-	-	11
Additions of intangible assets	(55)	(21)	(109)
Interest received	-	-	1
Cash consumed in investing activities	(98)	(43)	(186)
Financing activities:
Proceeds from loans	-	-	512
Repayment of loans	(497)	(88)	(62)
New finance leases	-	-	42
Discharge of finance lease liability	(27)	(8)	(43)
Proceeds from share issue	142	57	140
Interest paid	(122)	(26)	(205)
Cash (consumed)/generated in financing activities	(504)	(65)	384
Net change in cash and cash equivalents	88	(749)	(389)
Cash and cash equivalents, beginning of period	18	407	407
Cash and cash equivalents, end of period	106	(342)	18
Bank overdraft of £16,000 (30 June 2008: £nil) (31 December 2008: £74,000) is included in cash and cash equivalents.

Notes to the interim financial statements

1    Nature of operations and general information

Symphony Environmental Technologies plc and subsidiaries' ('the Group') principal activities include the development and supply of d2w® controlled-life plastic additives and products, and the development of waste to energy systems.

Symphony Environmental Technologies plc, a public limited company, is the Group's parent company. It is incorporated and domiciled in England. The address of its registered office is Elstree House, Elstree Way, Borehamwood, Hertfordshire, WD6 1LE, England. Symphony Environmental Technologies plc's shares are listed on the AIM market of the London Stock Exchange, the PLUS market in London and on the 'pink sheets' of the United States over-the-counter market.

These interim condensed consolidated financial statements are for the six months ended 30 June 2009. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2008.

The financial information set out in this interim report does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The Group's statutory financial statements for the year ended 31 December 2008 have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain a statement under Section 237(2) or (3) of the Companies Act 1985. These interim condensed consolidated financial statements have not been audited.

These interim condensed consolidated financial statements have been prepared in accordance with International Accounting Standard ('IAS') 34 'Interim Financial Reporting', and are presented in 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 European Union, and the policies and measurements are consistent with those stated in the financial statements for the year ended 31 December 2008. 

There have been no accounting policy changes since 31 December 2008 except for the adoption of IAS 1 'Presentation of Financial Statements (Revised 2007)' and International Financial Reporting Standard ('IFRS') 8 Operating Segments.

The adoption of IAS 1 (Revised 2007) does not affect the financial position or profits of the Group, but gives rise to additional disclosures. The measurement and recognition of the Group's assets, liabilities, income and expenses is unchanged. IAS 1 (Revised 2007) affects the presentation of owner changes in equity and introduces a 'Statement of Comprehensive Income'. In addition, the balance sheet has been renamed as statement of financial position.

The adoption of IFRS 8 has not changed the segments that are disclosed in the interim condensed consolidated financial statements. In the previous annual and interim financial statements, segments were identified by reference to the dominant source and nature of the Group's risks and returns. Under IFRS 8 the accounting policy for identifying segments is now based on the internal management reporting information that is regularly reviewed by the chief operating decision maker. These are the same for the Group.

These interim condensed consolidated financial statements were approved by the board on 9 September 2009.

2    Segment analysis

The chief operating decision maker of the Group reviews the business in three main segments, supply of degradable products, supply of non-degradable products and development of waste to energy systems.

Business segments		Degradable d2w®	Non-degradable	Waste to energy	Group
6 months to 30 June 2009		£'000	£'000	£'000	£'000
Revenue		3,643	42	-	3,685
Apportioned costs		(3,091)	(92)	(100)	(3,283)
Result for the period before tax		552	(50)	(100)	402
Taxation		-	-	-	-
Profit/(loss) for the period		552	(50)	(100)	402

Business segments		Degradable d2w®	Non-degradable	Waste to energy	Group
6 months to 30 June 2008		£'000	£'000	£'000	£'000
Revenue		2,105	158	40	2,303
Apportioned costs		(2,044)	(326)	(100)	(2,470)
Result for the period before tax		61	(168)	(60)	(167)
Taxation		-	-	-	-
Profit/(loss) for the period		61	(168)	(60)	(167)

Business segments		Degradable d2w®	Non-degradable	Waste to energy	Group
12 months to 31 December 2008		£'000	£'000	£'000	£'000
Revenue		5,127	228	-	5,355
Share based payments		(12)	-	-	(12)
Apportioned costs		(4,919)	(697)	(125)	(5,741)
Result for the year before tax		196	(469)	(125)	(398)
Taxation		766	-	-	766
Profit 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 to the basis of segmentation since the last annual financial statements.

There has been no change in total assets other than in the ordinary course of business.

3    Shares issued

On 19 January 2009 the Company issued 2,202,384 ordinary 1p shares at 1.9p per share in respect of part conversion of a convertible loan. On 28 January 2009 the Company issued a further 5,263,157 ordinary 1p shares at 1.9p per share in respect of a further part conversion of a convertible loan.

Shares issued for the period under review may be summarised as follows:

Shares issued and fully paid		6 months to  30 June 2009	6 months to  30 June 2008	Year to  31 December 2008
- beginning of period		108,719,036	101,772,999	101,772,999
- issued during the period		7,465,541	3,446,037	6,946,037
Total equity shares issued and fully paid at end of period		116,184,577	105,219,036	108,719,036

The shares issued yielded £141,845 and reduced the capital element of the convertible loan by £140,000. The balance of £1,845 repaid accrued interest on the capital element of the convertible loan repaid. In total, equity was increased by £141,845.

4    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 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 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 2009	6 months to 30 June 2008	Year to 31 December 2008
Profit/(loss) attributable to owners of the company		£402,000	(£167,000)	£368,000
Weighted average number of ordinary shares in issue		115,180,444	103,079,464	105,628,745
Basic earnings per share		0.35 pence	(0.16) pence	0.35 pence
Dilutive effect of weighted average options and warrants		16,895,835	6,700,000	7,719,605
Total of weighted average shares together with dilutive effect of weighted options and warrants		132,076,279	109,779,464	113,348,350
Diluted earnings per share		0.30 pence	(0.16) pence (*)	0.32 pence

No dividends were paid for the year ended 31 December 2008.

* The effect of the options and warrants are anti-dilutive for this period

5    Availability of Interim Financial Statements

Paper copies of the Interim Financial Statements will be sent to shareholders upon request. Otherwise, shareholders will be able to download a copy of the Interim Financial Statements from the Group's website www.d2w.net. Further copies of the Interim Financial Statements will be available from the Company's Registered Office  at Elstree House, Elstree Way, Borehamwood, Herts WD6 1LE.

 

END

 

 

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