REG - Symphony Environment - Interim Results for 6 Months Ended 30 June 2024
09/09/2024 07:00
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RNS Number : 3050D Symphony Environmental Tech. PLC 09 September 2024
9 September 2024
SYMPHONY ENVIRONMENTAL TECHNOLOGIES PLC
("Symphony", the "Company" or the "Group")
Interim Results
Symphony Environmental Technologies Plc (AIM: SYM), the global specialist that
makes plastic products smarter, safer and sustainable, is pleased to announce
its interim financial results for the six-month period ended 30 June 2024
("H1-2024" or the "Period").
Financial highlights
· Group revenue of £3.4 million (H1-2023: £3.6 million) due to
reduced non-masterbatch revenues
· Gross profit margin increased to 46% contributing to increased gross
profit of £1.6 million (H1-2023: 42% and £1.5 million respectively)
· Operating loss reduced by 50% to £0.4 million (H1-2023: £0.8
million)
· Significant fall in operating loss in Q2-2024 to £50,000 with
strengthening results in all main d2w markets
· Successful equity fundraise of £1.3 million in March 2024
· Extension of £1.5 million convertible loan notes to 31 December
2025
Post period-end
· Continuing to operate in line with Q2-2024
· Positive legislation and regulation changes in key markets
increasing d2w demand
· d2p bread technology becomes commercial in one more country,
making a total of three countries
· d2p bread technology undergoing two semi-commercial
pre-evaluation trials in the USA
Michael Laurier, CEO of Symphony commented "These H1-2024 results demonstrate
a material turnaround in financial performance following improved d2w core
markets during Q2 and successful implementation of a cost reduction program,
which has started to increase our operating margins. This process will
continue through the second half of this year where we are seeing a further
strengthening in our global d2w markets as well as continuing positive
developments in our d2p programmes."
Enquiries:
Symphony Environmental Technologies Plc
Michael Laurier, CEO Tel: +44 (0) 20 8207 5900
Ian Bristow, CFO
www.symphonyenvironmental.com (http://www.symphonyenvironmental.com)
Zeus (Nominated Adviser and Broker)
David Foreman / Alexandra Campbell-Harris (Investment Banking) Tel: +44 (0) 203 829 5000
Dominic King (Corporate Broking)
Chairman's statement
Following on from my Preliminary Results statement of the 6 June, I am pleased
to report that the Group continues to show improving financial performance
with these results. H1-2024 reflects a significant turning point in our
trading performance. We have seen improving revenues in some of our main
markets, strengthening gross margins and lower operating costs to the extent
that the Group recorded a small operating loss in the second quarter.
This positive trend is set to continue into H2-2024 as we work through further
initiatives to reduce product and production cost as well as increasing sales
in some key markets, such as the Middle East and Latin America.
With growing optimism, the Board can reconfirm that our opportunities are
significant and progressing well.
Nicolas Clavel, Chairman
Chief Executive's review
This first half set of results for 2024 shows a material turnaround in our
financial performance following strengthening of our d2w core markets during
quarter two, and the successful implementation of a cost reduction programme
which has started to increase our operating margins. This process continues
into the second half of this year where we are also seeing a further
strengthening in our d2w markets as well as continuing positive developments
in our d2p programmes.
Financial
Revenue for the six months ended 30 June 2024 was £3.4 million (H1-2023:
£3.6 million). The small reduction was within non d2w or d2p masterbatch
revenues.
Gross margins improved during the Period (from 42% in H1-2023 to 46% in
H1-2024) due to reducing raw material and production costs together with
further managed efficiencies in the supply chain. The resultant contribution
after distribution costs increased from 39% to 42% of revenues.
6 months to 6 months to 12 months to
30 June 30 June 31 December
2024 2023 2023
Unaudited Unaudited Audited
£'000 £'000 £'000
2,781 2,778 5,221
d2w masterbatch revenues
d2p masterbatch revenues 402 357 512
Other revenues including finished products 254 439 618
Total revenues 3,437 3,574 6,351
Gross profit 1,568 1,503 2,333
- Gross profit margin 46% 42% 37%
Distribution costs (125) (114) (203)
- Percentage of revenues 4% 3% 3%
Contribution after distribution costs 1,444 1,389 2,130
- Percentage of revenues 42% 39% 34%
Administrative expenses reduced 14% against the same period last year from
£2.2 million in H1-2023 to £1.9 million in H1-2024. This was due to a 50%
reduction in professional and consultancy fees, some relating to costs
incurred for the EU litigation which are no longer required.
The Group's operating loss for the Period was £0.4 million, a 50% reduction
compared to the loss in H1-2023 of £0.8 million. The share of this operating
loss in Q2-2024 was £50,000 due to strengthening d2w revenues in all of the
Group's main markets.
The Group's share of Symphony India's joint venture loss for the Period was
£28,000 (H1-2023: loss £15,000).
The Group reports a loss before tax of £0.5 million (H1-2023: £0.9 million).
R&D tax credits (H1-2024: £nil) are only recognised on receipt from HMRC
(H1-2023: £98,000). We expect to make an appropriate claim during H2-2024 for
FY-2023. The Group reports a loss after tax of £0.5 million (H1-2023: £0.8
million).
The loss per share for the Period was 0.27 pence (H1-2023: 0.41 pence).
The Group's working capital position and outlook improved significantly during
the Period with net cash (excluding convertible loans and lease liabilities)
of £0.2 million at the end of the Period (31 December 2023: net borrowings
(excluding convertible loans and lease liabilities) of £0.6 million). Whilst
net cash of £0.3 million was used in operations (H1-2023: £0.5 million), we
successfully raised £1.3 million of new equity (and at a 67% premium to the
prevailing share price) during the Period. Importantly, we also agreed an
extension of the convertible loan notes of £1.5 million to 31 December 2025.
The Group has an invoice-discounting facility of £1.5 million to assist in
funding outstanding receivables. With the improving trading performance and
use of working capital, the Board believes that the Group has sufficient
working capital to support the business and its current opportunities going
forward.
d2p "designed-to-protect"
Sales of d2p AI were higher than H1-2023 and we continue to work on gaining
regulatory clearances for new markets.
Sales of our FDA approved d2p AM formulation for bread applications continue
to grow slowly, with the technology currently being used in specialised brands
in India, Mexico, Peru and shortly Colombia. Semi-commercial trials are
ongoing in two locations in the USA and new trials are being planned in
Pakistan and Turkey. We continue to see consistent and positive performance
from customer reports, which support our view of the value proposition for
using d2p technology in all plastic bread packaging.
We continue with several other projects within the d2p pipeline including the
technologies mentioned above, as well as for flame-retardant, ethylene control
and odour adsorbant technologies.
d2w biodegradable technology
Manufacturing at the Ecobatch Plastic Factory in the UAE is operating well and
the Middle East market remains strong with new cost reduction initiatives
improving our position in the region.
Saudi Arabia has completed its biodegradable technical evaluation process, and
we await wider enforcement of Phase 1 of the legislation (which requires a
range of products to be oxo-biodegradable and progressing to Phases 2 and 3
which include an even wider range of products). Sales to Yemen have now
started to increase where d2w is mandatory and officials are actively
enforcing the rules.
The Latin American market opportunity is mainly driven by a growing demand for
ESG compliance, with concerns that changes to legislation will force customers
to substitute ordinary plastics for paper, compostable plastics or another
type of biodegradable alternative. Due to issues surrounding this, we are now
seeing positive regulatory moves in some countries that encourage our type of
d2w biodegradable technology, and we are optimistic this be demonstrable in
our H2-2024 reported revenues.
Symphony India
As previously advised, if the standard IS 17899 T:2022 Assessment of
Biodegradability of Plastics in Varied Conditions is satisfied, the
opportunities in India could be substantial. Symphony India has identified
more than 500 prospective companies for which d2w could provide a material
benefit. Active discussions are underway with the majority of these target
customers who have already been directly corresponded with, but the Board
believe the prospects of Symphony India extend far beyond the initial 500
companies.
Several d2p trials are also ongoing in India including d2p AM (antimicrobial)
for bread bags, of which one has completed successful small trials and is now
conducting semi commercial trials.
Outlook
The Group has developed and invested into a valuable and large portfolio of
d2w and d2p technologies, with our own IP, over the past 25 years. Some of
these are nearing commercial adoption and some just starting pre-commercial
evaluation trials. As previously reported, the sales pipeline is material in
terms of potential financial value and this position is enhanced by a much
lower cost base that is marketed globally through 76 distributors.
Several of our main markets for d2w, our biodegradable plastic technology,
have become more active and demand is strengthening, fuelled by an urgency for
change to a better type or class of plastic. This changing environment is
helpful for the Group as our range of technologies are non-disruptive and can
easily be dropped into an existing manufacturing and supply system. We
believe, as one of the world's top biodegradable technology brands, using d2w
technologies will help our customers and potential customers to respond better
to consumers, government and corporates for better ESG policies for "single
use plastics"
Given the improvement in our Q2-2024 performance which has since been
maintained, together with further cost reduction initiatives and strengthening
markets, we look forward with confidence.
Michael Laurier, Chief Executive
Condensed consolidated interim statement of comprehensive income
6 months to 6 months to 12 months to
30 June 30 June 31 December
2024 2023 2023
Unaudited Unaudited Audited
£'000 £'000 £'000
Revenue 3,437 3,574 6,351
(1,868) (4,018)
Cost of sales (2,071)
Gross profit 1,569 1,503 2,333
Distribution costs (125) (114) (203)
Administrative expenses (1,861) (2,154) (4,119)
Operating loss (417) (765) (1,989)
Finance costs (97) (83) (189)
Share of results of joint ventures (28) (15) (73)
Loss for the Period before tax (542) (863) (2,251)
Tax credit - 98 71
Loss for the Period (542) (765) (2,180)
Total comprehensive income for the Period (542) (2,180)
(765)
Earnings per share:
Basic (0.27)p (0.41)p (1.18)p
Diluted (0.27)p (0.41)p (1.18)p
Administrative expenses for H1-2023 include £169,000 of exceptional legal
costs.
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 30 June 31 December
2024 2023 2023
Unaudited Unaudited Audited
£'000 £'000 £'000
ASSETS
Non-current
Property, plant and equipment 144 172 168
Right-of-use assets 181 296 270
Intangible assets 648 573 653
Interest in joint ventures - 86 28
Investments 130 130 130
1,103 1,257 1,249
Current
Inventories 474 966 645
Trade and other receivables 1,980 2,175 1,812
Cash and cash equivalents 754 1,162 1,123
3,208 4,303 3,580
Total assets 4,311 5,560 4,829
EQUITY AND LIABILITIES
Equity
Equity attributable to owners of
Symphony Environmental Technologies plc
Share capital 2,251 1,848 1,848
Share premium account 5,767 4,854 4,854
Retained earnings (7,630) (5,741) (7,102)
Total equity 388 961 (400)
Liabilities
Non-current
Borrowings 1,500 - -
Lease liabilities 35 98 47
1,535 98 47
Current
Borrowings 546 2,773 3,270
Lease liabilities 106 165 187
Trade and other payables 1,736 1,563 1,725
2,388 4,501 5,182
Total liabilities 3,923 4,599 5,229
Total equity and liabilities 4,311 5,560 4,829
Condensed consolidated interim statement of changes in equity
Equity attributable to the owners of Symphony Environmental Technologies plc:
Share Share premium Retained earnings Total
capital equity
£'000 £'000 £'000 £'000
For the six months to 30 June 2024
Balance at 1 January 2024 1,848 4,854 (7,102) (400)
Share-based payments - - 14 14
Shares issued 403 913 - 1,316
Transactions with owners 403 913 14 1,330
Total comprehensive income for the Period - - (542) (542)
Balance at 30 June 2024 2,251 5,767 (7,630) 388
Share Share premium Retained earnings Total
capital equity
£'000 £'000 £'000 £'000
For the six months to 30 June 2023
Balance at 1 January 2023 1,848 4,854 (4,999) 1,703
Share-based payments - - 23 23
Transactions with owners - - 23 23
Total comprehensive income for the Period - - (765) (765)
Balance at 30 June 2023 1,848 4,854 (5,741) 961
Share Share premium Retained earnings Total
capital equity
£'000 £'000 £'000 £'000
For the year to 31 December 2023
Balance at 1 January 2023 1,848 4,854 (4,999) 1,703
Share-based payments - - 77 77
Transactions with owners - - 77 77
Total comprehensive income for the Period - - (2,180) (2,180)
Balance at 31 December 2023 1,848 4,854 (7,102) (400)
Condensed consolidated interim cash flow statement
6 months to 6 months to 12 months to
30 June 30 June 31 December
2024 2023 2023
Restated
Unaudited Unaudited Audited
£'000 £'000 £'000
Operating activities:
Loss for the Period after tax (542) (765) (2,180)
Depreciation 114 106 220
Amortisation 5 9 15
Share-based payments 14 23 77
Loss on disposal of fixed assets - 2 3
Loss on disposal of intangible assets - - 28
Foreign exchange (profit)/loss - - (12)
Share of loss of joint venture 28 15 73
Tax credit - (98) (71)
Interest paid 100 83 189
Change in inventories 171 209 530
Change in trade and other receivables (168) 174 594
Change in trade and other payables (52) (258) (85)
Net cash used in operations (330) (500) (619)
Tax received - 98 97
Net cash used in operating activities (330) (402) (522)
Investing activities:
Additions to property, plant and equipment (1) (59) (84)
Additions to intangible assets - (142) (257)
Net cash used in investing activities (1) (201) (341)
Financing activities:
Drawdown cash received from invoice finance facility 1,972 3,167 5,686
Customer receipts repayment of invoice finance facility (2,587) (3,258) (5,927)
Proceeds from share issues 1,316 - -
Proceeds from convertible loan - 1,000 1,500
Repayment of lease liability (94) (86) (174)
Lease interest paid (7) (8) (17)
Bank and invoice finance interest paid (93) (75) (172)
Net cash generated/(used) in financing activities 507 896
740
Net change in cash and cash equivalents 176 137 33
Cash and cash equivalents, beginning of Period 32 18 18
Effect of exchange rate on cash - - (19)
Cash and cash equivalents, end of Period 208 155 32
Represented by:
Cash and cash equivalents 754 1,162 1,123
Bank overdraft (546) (1,007) (1,091)
208 155 32
Cash flows from financing activities has been restated in H1-2023 to show
gross monies drawn down against customer receipts as opposed to a net movement
in the facility drawn.
Notes to the interim financial statements
1 Nature of operations and general information
Principal activities of Symphony Environmental Technologies plc (the
"Company") and subsidiaries' (together the "Group") include the development
and supply of environmental plastic masterbatches and other innovative
products.
Symphony Environmental Technologies plc, a public limited company, is the
Group's ultimate parent company. It is incorporated and domiciled in England
(company number 03676824). The address of its registered office is 6 Elstree
Gate, Elstree Way, Borehamwood, Hertfordshire, WD6 1JD, England. The Company's
shares are listed on the AIM market of the London Stock Exchange.
These condensed interim consolidated financial statements ("interim financial
statements" or "interim report") are for the six months ended 30 June 2024.
They do not include all 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 2023.
The financial information set out in this interim report does not constitute
statutory accounts. The Group's statutory financial statements for the year
ended 31 December 2023 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 498(2) or 498(3) of the Companies Act 2006.
These interim condensed consolidated financial statements have not been
audited.
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 Standards as adopted
by the UK, and the policies and measurements are consistent with those stated
in the financial statements for the year ended 31 December 2023.
These interim financial statements were approved by the board on 6 September
2024.
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 31 December 2023
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:
6 months to 6 months to Year to
30 June 30 June 31 December 2023
Shares issued and fully paid 2024 2023
- beginning of the Period 184,806,833 184,806,833 184,806,833
- issued during the Period 40,292,287 - -
Total equity shares issued and fully paid at end of the Period
225,099,120 184,806,833 184,806,833
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 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 6 months to Year to
30 June 30 June 31 December 2023
2024 2023
Loss attributable to owners of the Company £(542,000) £(765,000) £(2,180,000)
Weighted average number of ordinary shares in issue
203,738,715 184,806,833 184,806,833
Basic earnings per share (0.27) pence (0.41) pence (1.18) pence
Dilutive effect of weighted average options - 4,323,621 3,686,662
Total of weighted average shares together with dilutive effect of weighted 203,738,715 184,806,833 184,806,833
options - see below
Diluted earnings per share (0.27) pence (0.41) pence (1.18) pence
No dividends were paid for the year ended 31 December 2023.
The Group has been loss-making in all periods presented. The effect of options
for the six months to 30 June 2024 and 30 June 2023, and year to 31 December
2023 are therefore anti-dilutive. Accordingly, the dilutive effect of share
options has not been taken into account of in calculating diluted earnings per
share, since this would decrease the loss per share for each of the period
reported.
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. Further copies of the Interim
Financial Statements will be available from the Company's Registered Office at
6 Elstree Gate, Elstree Way, Borehamwood, Hertfordshire WD6 1JD.
NOTES TO EDITORS:
About Symphony Environmental Technologies plc
www.symphonyenvironmental.com (http://www.symphonyenvironmental.com)
d2w TECHNOLOGY
Symphony has developed a biodegradable plastic technology which addresses the
problem of persistent microplastics, by turning ordinary plastic at the end of
its service-life into a waxy substance which is biodegradable. It is then no
longer a plastic and can be bioassimilated in the open environment in a
similar way to a leaf without leaving microplastics behind. See
https://www.symphonyenvironmental.com/why-biodegradable/
(https://www.symphonyenvironmental.com/why-biodegradable/) 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, much of which
has been recycled. In some countries, oxo-biodegradable plastic is mandatory
for short-life plastic products.
d2w technology was studied for three years in the Oxomar project, sponsored by
the French government, which concluded that plastic made with Symphony's d2w
oxo-biodegradable technology will biodegrade in seawater significantly more
efficiently than conventional plastic. See
www.biodeg.org/subjects-of-interest/agriculture-and-horticulture/the-marine-environment/
(http://www.biodeg.org/subjects-of-interest/agriculture-and-horticulture/the-marine-environment/)
Following this report, the scientists allowed bacteria commonly found in the
open environment access to d2w oxo-biodegradable plastic containing Carbon
13. They found Carbon 13 in the carbon dioxide exhaled by the bacteria,
proving beyond doubt that the plastic had been bioassimilated by the bacteria.
d2p TECHNOLOGY
Symphony has developed a range of additives, concentrates and master-batches
marketed under its d2p® ("designed to protect") trademark, which can be
incorporated in a wide variety of plastic and non-plastic products so as to
provide protection against many different types of bacteria, viruses, fungi,
algae, moulds, and insects, and against fire. See www.d2p.net
(http://www.d2p.net) d2p products also include odour, moisture and ethylene
adsorbers as well as other types of food-preserving technologies. For an
overview see www.d2p.net (http://www.d2p.net) Symphony has launched d2p
anti-microbial household gloves and toothbrushes and "Symfresh" food-packaging
and is developing a range of other d2p finished-products for retail sale.
d2c TECHNOLOGY
Symphony has complemented its d2w and d2p product ranges with d2c "compostable
resins and products" that have been tested to US and EU composting standards
and has invested in Eranova - a French company extracting starch for making
plastics out of algae.
d2DETECTOR
Symphony has also developed the d2Detector®, a portable device which analyses
plastics and detects counterfeit products. This is useful for government
officials tasked with enforcing legislation, and Symphony's d2t tagging and
tracer technology is available for further security.
SYMPHONY'S BUSINESS
Symphony has a diverse and growing customer-base and has established itself as
an international business with over 70 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 founder-member of The BPA (www.biodeg.org) and actively
participates in the Committee work of the British Standards Institute (BSI),
the American Standards Organisation (ASTM), the European Standards
Organisation (CEN), and the International Standards Organisation (ISO).
Further information on the Group can be found at www.symphonyenvironmental.com
and X @SymphonyEnv. See also Symphony on Instagram.
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