03:00 Wed 20 Apr 2016
Symphony Environment - Preliminary Results for the year ended 31 Dec 2015
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SYMPHONY ENVIRONMENTAL TECHNOLOGIES PLC
("Symphony" or the "Group")
Preliminary Results for the year ended
Highlights
· Revenues of
· Gross profit of
· Operating loss before non-recurring costs of
· Non-recurring costs
· Loss before tax of
· Loss after tax of
· Basic loss per share of 2.26p (2014: loss per share 0.23p)
· Cash generated in operations of
· Somerston placing of
· Directors purchase of 501,000 shares during the year
Post year-end
· 1st quarter revenues 8% higher than same period last year
· Operating costs expected to reduce by approximately
· Completion of new Recycling Study into oxo-biodegradable technology
· Launched new corporate website
Nirj Deva, Chairman of Symphony, said:
The year under review included some major investments in marketing and development costs, however, revenues remained disappointingly static, resulting in the operating loss before exceptional items increasing to
As a result of the above, and following years of significant investment into our d2w oxo-biodegradable plastic masterbatch range, the Group's primary revenue generating technology, the Board has carried out a strategic review of its technologies and their operating position.
· For d2w, a number of successful commercial milestones have been achieved. As a result, the technology's main sustainability credentials namely, Eco-label, Recycling Studies, Bio-degradation and Eco-toxicity on land and in the sea have been enhanced. This is in addition to an earlier Life Cycle Analysis in support of oxo-biodegradable technology. Symphony has, and continues to achieve, positive political momentum in several overseas markets where Governments aim to resolve the plastic litter crisis without damaging the plastic industry. Accordingly, the Board has decided that it will substantially reduce, but not eliminate, its investment into product development and marketing as it is unlikely to have a short to medium term impact on the Group's revenue generation. The Board believes that the opportunities for d2w oxo-biodegradable plastic will remain at the same high levels, despite a reduced level of investment.
· For d2p, significant technological milestones have been achieved and although the Board is confident that material sales can result in the near future, there is an uncertainty in relation to timing. The Group has therefore realigned its focus, cost and investment into d2p "designed to protect" plastic additives and masterbatches. The Board has successfully developed a number of new formulations in the d2p range, including but not limited to the following; anti-microbial, flame retardant, and insecticides. Some of these technologies may require certification or regulatory clearance before commercial use and the Board is working hard to obtain these with our distributors. d2p has a number of synergies with our established markets and customers, and the Group has a high number of sales opportunities that could result in a material increase in revenue in the near term. Due to both technical and regulatory reasons, no certainty of success can be given, however the Board has received positive indications from potential customers for the new products.
The impact of the strategic review on its technologies affects Symphony in the following ways:
· The Group has been able to significantly reduce its ongoing operating and marketing costs, which are expected to show a reduction of approximately
· The Board have reduced their fixed remuneration.
· Management are more focused on delivering products and technologies which will create shorter term value for shareholders.
· The cost base is now better aligned with the Group's current levels of revenue, with potential upside should sales increase.
· Given the uncertainty, a number of items being carried on the Group's balance sheet have been impaired including development costs relating mainly to d2p of
The Company has, and can foresee, no working capital constraints as a result of these changes.
The Board would like to thank its shareholders, management, distributors and staff for their steadfast commitment and dedication towards the commercial success of the business.
N Deva DL FRSA MEP
Chairman
Contacts
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Tel: +44 (0) 20 8207 5900 |
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Tel: +44 (0) 20 7894 7000 |
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Chief Executive's review
The Group successfully completed an important phase in its long term d2w development plan and no longer requires the same level of investment, time and overhead cost to realise the full sales potential for this technology.
d2w® - Controlled-life Plastic Technology
Symphony d2w technology is known globally as an important technology and credible brand that is helping governments deal with the issue of plastic pollution and litter without the need to ban plastic products. d2w has been trialled and tested over a long period of time by a wide range of organisations. It is the only oxo-biodegradable technology that has a complete set of sustainable credentials, namely, Life Cycle Assessment "LCA", Eco-label, Millennium Product, Eco-Toxicity, Bio-degradation, Recycling and membership to the important trade body, The Oxo-biodegradable Plastic Association "OPA".
Consistent with previous years, the range of d2w masterbatches and products represented the majority of the Group's revenues in 2015. Towards the year end it became clear that costs and investments could be reduced or even eliminated as the business had achieved one of its primary objectives, namely to create demand through positive Corporate Social Responsibility "CSR" credentials and legislative drivers. It was also clear that sales should grow from the many on-going and established relationships and projects. The main drivers for d2w technology have been; organisations that need a low cost, easy to change, pragmatic solution to improve their CSR and environmental credentials, and governments that urgently needed to resolve the many issues created by plastic litter on land and in the oceans, and without materially increasing the cost of packaging or risk to food and health. The legislative drive in support of our d2w biodegradable type technology is continuing albeit mostly outside of
d2p™ - Technology that is designed to protect
Symphony's product diversification and expansion strategy is being driven under the umbrella of the d2p brand which is gaining momentum in many applications within the global distribution network.
Symphony continues its investment into creating intellectual property for the growing number of d2p products. Some of these technologies require certification or regulatory clearance before commercial use, and some do not. Customer trials have been on-going for a number of years and some have been initiated in the period under review. From these, a number of trials have completed successfully with initial modest sales being achieve. Moving forward, given the stage of development now reached for the d2p range of technologies, the level of investment required on an on-going operating basis is expected to be less than in previous periods.
Due to confidentiality, details cannot be provided at this stage other than to say that these projects cover several countries and industry sectors. In particular, the business has one major project at contract negotiation phase after the completion of successful trials over the past 18 months.
Trading results
Group revenues were marginally higher at
Recurring administrative expenses increased by 12.9% to
Including non-recurring items, the Group made an operating loss of
Excluding non-recurring items, the Group made an EBITDA loss of
Included within the taxation charge of
The Group therefore reports a loss for the year of
The Group's primary selling currency is the US Dollar. The Group had no contractual hedging instruments at the end of 2015 and self-hedges where possible by purchasing in US Dollars, and has banking facilities in place in order to secure rates going forward. As at
Segmental analysis
The Group operates two business divisions being the Plastics Division (
Plastics Sales, which represent all Group sales, generated an EBITDA loss of
SRT has no revenues to date and incurred a small amount of maintenance expenditure in 2015. In 2014 SRT had incurred costs of
Cashflow
The Group generated cash of
The Group had net cash in the bank of
Outlook
The results for 2015 reflect the continued investment phases for both our d2w and d2p technologies, and we have now set a much lower operating cost basis for the business going forward. The business is transitioning away from product development activities that required capital for long-term returns and is now moving towards a stronger focus on shorter-term commercialisation and sales opportunities.
Sales for the first quarter of 2016 are 8% higher than for the same period last year, and on a conservative basis for the full year the Board expects to achieve moderate sales growth whilst maintaining gross margins. In addition, the Board expects operating costs for the full year 2016 to be approximately
The Board considers the longer term sales prospects for both d2p and d2w as being positive as a result of the new d2p technologies being capable of commercialisation, and for d2w, where there is enforcement of legislative changes.
The Group has been working for some time on a number of high-profile projects for both its technologies and the Board believe these are progressing well, although it should be noted that no certainty of success can be provided at this stage.
I am pleased to confirm that the Group has sufficient working capital to execute its strategy and to complete its short to medium term objectives. As an operationally geared business, now running with a significantly lower cost base, the Board looks forward to a financially more successful year in 2016.
Consolidated statement of comprehensive income
for the year ended
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2015 |
2014 |
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Note |
£'000 |
£'000 |
£'000 |
£'000 |
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Revenue |
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6,365 |
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6,352 |
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Cost of sales |
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(3,437) |
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(3,191) |
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Gross profit |
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2,928 |
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3,161 |
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Distribution costs |
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(221) |
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(165) |
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Administrative expenses - recurring |
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(3,679) |
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(3,261) |
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Administrative expenses - non-recurring |
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- |
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Administrative expenses |
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(4,992) |
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(3,261) |
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Operating loss - before non-recurring items |
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(972) |
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(265) |
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Operating loss - non-recurring |
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(1,313) |
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- |
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Operating loss |
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(2,285) |
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(265) |
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Finance income |
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- |
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1 |
Finance costs |
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(16) |
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(126) |
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Loss for the year before tax |
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(2,301) |
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(390) |
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Taxation |
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(1,031) |
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85 |
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Loss for the year |
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(3,332) |
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(305) |
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Total comprehensive income for the year |
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(3,332) |
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(305) |
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Basic loss per share |
3 |
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(2.26)p |
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(0.23)p |
Diluted loss per share |
3 |
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(2.26)p |
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(0.23)p |
Consolidated statement of financial position
as at
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2015 |
2014 |
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£'000 |
£'000 |
Assets |
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Non-current |
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Property, plant and equipment |
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397 |
372 |
Intangible assets |
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73 |
1,169 |
Deferred income tax asset |
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- |
1,142 |
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470 |
2,683 |
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Current |
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Inventories |
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477 |
576 |
Trade and other receivables |
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852 |
1,425 |
Cash and cash equivalents |
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122 |
938 |
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1,451 |
2,939 |
Total assets |
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1,921 |
5,622 |
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Equity |
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Equity attributable to shareholders of |
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Ordinary shares |
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1,499 |
1,446 |
Share premium |
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3,533 |
3,077 |
Retained earnings |
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(4,139) |
(807) |
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Total equity |
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893 |
3,716 |
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Liabilities |
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Non-current |
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Interest bearing loans and borrowings |
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6 |
- |
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6 |
- |
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Current |
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Interest bearing loans and borrowings |
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170 |
1,153 |
Trade and other payables |
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852 |
753 |
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1,022 |
1,906 |
Total liabilities |
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1,028 |
1,906 |
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Total equity and liabilities |
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1,921 |
5,622 |
Consolidated statement of changes in equity
for the year ended
Equity attributable to the equity holders of
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Share capital |
Share premium |
Retained earnings |
Total equity |
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£'000 |
£'000 |
£'000 |
£'000 |
For the year to |
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Balance at |
1,446 |
3,077 |
(807) |
3,716 |
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Issue of share capital |
53 |
456 |
- |
509 |
Transactions with owners |
53 |
456 |
- |
509 |
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Loss and total comprehensive income for the year |
- |
- |
(3,332) |
(3,332) |
Balance at |
1,499 |
3,533 |
(4,139) |
893 |
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For the year to |
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Balance at |
1,281 |
1,650 |
(502) |
2,429 |
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Issue of share capital |
165 |
1,427 |
- |
1,592 |
Transactions with owners |
165 |
1,427 |
- |
1,592 |
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Loss and total comprehensive income for the year |
- |
- |
(305) |
(305) |
Balance at |
1,446 |
3,077 |
(807) |
3,716 |
The accompanying notes form an integral part of these financial statements.
Consolidated cash flow statement
for the year ended
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Note |
2015 |
2014 |
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£'000 |
£'000 |
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Operating activities |
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Net cash used in operations |
4 |
(80) |
(180) |
Tax received - R&D tax credits |
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111 |
85 |
Net cash generated/(used) in operating activities |
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31 |
(95) |
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Investing activities |
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Additions to property, plant and equipment |
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(141) |
(77) |
Additions to intangible assets |
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(212) |
(261) |
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Net cash used in investing activities |
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(353) |
(338) |
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Financing activities |
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Repayments of borrowings |
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(650) |
- |
Movement in working capital facility |
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15 |
(432) |
Movement in finance lease liability |
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7 |
(9) |
Proceeds from share issue |
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509 |
1,592 |
Interest paid |
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(16) |
(126) |
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Net cash generated from financing activities |
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(135) |
1,025 |
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Net change in cash and cash equivalents |
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(457) |
592 |
Cash and cash equivalents, beginning of year |
|
585 |
29 |
Foreign exchange losses |
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(11) |
(36) |
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Cash and cash equivalents, end of year |
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117 |
585 |
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The reconciliation to the cash and cash equivalents as reported in the statement of financial position is as follows:
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2015 £'000 |
2014 £'000 |
Loans and receivables: |
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Cash at bank and in hand |
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122 |
938 |
Financial liabilities measured at amortised cost: |
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Bank overdraft |
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(5) |
(353) |
Cash and cash equivalents, end of year |
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117 |
585 |
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
The financial information set out in this report does not constitute the Company's statutory accounts for the years ended
2 Segmental information
Management currently identifies the Group's three service lines as operating segments, "Plastics Sales", "Plastics R&D", and "Recycling Technologies (Recycling Tech)". "Plastics Sales" generate and maintain revenues relating to plastic additives, masterbatches and finished products. "Plastics R&D" which includes all new product development and research expenditure. The "Recycling Technologies" segment includes all activities involved in the development of tyre and rubber recycling systems.
The segmental results for the year ended
Business segments |
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Plastics Sales |
Plastics R&D |
Recycling Tech. |
Group |
Twelve months to 31 December 2015 |
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£'000 |
£'000 |
£'000 |
£'000 |
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Segment revenues |
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6,365 |
- |
- |
6,365 |
Apportioned costs |
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(6,715) |
(521) |
(5) |
(7,241) |
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EBITDA |
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(350) |
(521) |
(5) |
(876) |
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Depreciation and amortisation Impairment of intangible assets |
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(86) - |
(44) (1,234) |
- (45) |
(130) (1,279) |
Interest |
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(16) |
- |
- |
(16) |
Taxation |
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(1,142) |
111 |
- |
(1,031) |
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Profit/(loss) for the year |
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(1,594) |
(1,688) |
(50) |
(3,332) |
The segmental results for the year ended 31 December 2014 are as follows:
Business segments |
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Plastics |
Plastics R&D |
Recycling Tech. |
Group |
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12 months to 31 December 2014 |
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£'000 |
£'000 |
£'000 |
£'000 |
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Segment revenues |
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6,352 |
- |
- |
6,352 |
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Apportioned costs |
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(5,874) |
(406) |
(219) |
(6,499) |
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EBITDA |
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478 |
(406) |
(219) |
(147) |
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Depreciation and amortisation |
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(93) |
(25) |
- |
(118) |
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Interest |
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(125) |
- |
- |
(125) |
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Taxation |
|
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- |
69 |
16 |
85 |
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Profit/(loss) for the year |
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260 |
(362) |
(203) |
(305) |
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Revenues stated are from external customers.
There were no inter-segment revenues for the above periods.
3 Loss per share and dividends
The calculation of basic earnings per share is based on the 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 |
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2015 |
2014 |
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Loss attributable to equity holders of the Company |
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£(3,332,000) |
£(305,000) |
Weighted average number of ordinary shares in issue |
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147,616,172
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130,255,952
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Basic loss per share |
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(2.26) pence |
(0.23) pence |
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Dilutive effect of weighted average options |
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- |
- |
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Total of weighted average shares together with dilutive effect of weighted options |
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147,616,172 |
130,255,952 |
Diluted loss per share |
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(2.26) pence |
(0.23) pence |
No dividends were paid for the year ended 31 December 2015 (2014: £nil). The effect of options in 2015 and 2014 are anti-dilutive.
24,756,500 options were outstanding at the end of the year which may become dilutive in future years.
The loss before non-recurring items is £2,019,000 (2014: £305,000) and the basic and diluted loss per share using the weighted average number of ordinary shares of 147,616,172 (2014: 130,255,952) is 1.37 pence (2014: loss 0.23 pence).
4 Net cash used from operations
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2015 £'000 |
2014 £'000 |
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Loss after tax |
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(3,332) |
(305) |
Adjustments for: |
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Depreciation |
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101 |
89 |
Amortisation |
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29 |
29 |
Impairment of intangible assets |
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1,279 |
- |
Loss on disposal of tangible assets |
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14 |
10 |
Tax credit |
|
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(111) |
(85) |
Impairment of deferred tax asset |
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1,142 |
- |
Interest expense |
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16 |
126 |
Changes in working capital: |
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Inventories |
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|
99 |
(47) |
Trade and other receivables |
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584 |
(24) |
Trade and other payables |
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99 |
27 |
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Cash used in operations |
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(80) |
(180) |
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.d2w.net
NOTES TO EDITORS:
About
Symphony has developed a range of additives, concentrates and master-batches marketed as d2p, 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, mould and insects.
In addition, Symphony has developed 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 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 oxo-biodegradable plastic is mandatory. For a video of d2w® plastic degrading see http://degradable.net/play-videos/4.
Symphony has developed the d2Detector®, a portable device which analyses plastics and detects counterfeit products. Symphony's d2t 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 (
Further information on the Symphony Group can be found at www.symphonyenvironmental.com.
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