Symphony Environmental Technologies Plc (LON:SYM) global specialists in technologies that make plastic and rubber products “smarter, safer and sustainable”, has announced its preliminary results for the year ended 31 December 2021.
Financial highlights:
· Group revenues £9.16 million (2020: £9.77 million), lower principally due to £0.50 million of product missing year end shipping cut-off
· Revenue mix
| 2021 | 2020 | |
| d2w Masterbatch | £7.19 million | £7.27 million |
| d2p Masterbatch | £0.45 million | £0.47 million |
| Finished Products | £1.40 million | £1.80 million |
| Other | £0.12 million | £0.23 million |
· R&D spend expensed and/or capitalised £0.66 million (2020: £0.60 million)
· Gross profit £3.59 million (2020: £4.11 million)
· Reported loss before tax £1.53 million (2020: £0.44 million)
· Basic loss per share 0.81p (2020: 0.19p)
· Cash used in operations £0.60 million (2020: £1.44 million)
Business highlights:
d2p Technologies
· US FDA further approval for antibacterial plastic technology with greater loading and wider film use in bread packaging
· Canadian Health approval obtained for antibacterial bread packaging films
· Meditech nitrile glove manufacturing, marketing and distribution agreements
· Antimicrobial ten-minute Coronavirus kill rate achieved
· Substantial progress in many product areas including an increase in customer trials and product-tests currently underway.
· Significant potential sales identified in many of the current pipeline projects
Corporate
· Major Expansion with Joint Venture into India with Indorama Corporation – completed in February 2022
· Investment continues in the sales team, and new Head of Innovation appointed to accelerate the commercialisation of the Group’s growing portfolio of new and highly innovative products
· Several patent applications filed to protect our IP as many new products reach commercialisation
· Small Caps Award: ESG Company of the Year
Chairman’s Statement
2021 was a year of contrasting results. These financial results do not reflect the transformational effort and success that was achieved in many of our high value development projects that are mainly customer led. We had expected these material changes to positively impact 2021 but repeated and unpredictable lockdowns created logistical and resource difficulties, which delayed the commencement of some large and valuable projects. However, with the vaccination programmes being rolled out around the world, we now anticipate many of these projects will advance to commercialisation much faster, which will start to have a transformational effect on the business.
The progress in customer driven development projects, many of which are significant both from a revenue perspective, but crucially also underpin long term relationships, provide the Group with real optimism that substantial revenue growth in the short and longer term will be achieved.
Group revenues for the year ended 31 December 2021 were £9.16 million (2020: £9.77 million). Further, revenues of £0.50 million missed the year end cut-off due to shipping congestion and delayed sailings. Of the recognised revenues for 2021, both d2w and d2p were on a par with the previous year, with total year-on-year revenue reduction mainly in respect of PPE items such as gloves with the compliance, sampling and regulatory process taking much longer than anticipated. Together with congestion and delays, shipping charges were also high during the period, and this higher cost so far continues in 2022.
The business could maintain sales at approximately £9 million on a significantly reduced cost base (estimated at £2 million lower); however, the Board’s confidence in the outlook for the Group’s products, means we continue to invest in the Group’s infrastructure, staff and R&D so that the business is able to fully maximise the growth potential for the customers and markets already secured.
Investment into d2w, our biodegradable technology, continued during the year with further independent certification to prove biodegradability and no persistent microplastics on land and oceans, together with specific advocacy teams that are focussing on several important markets such as Latin America where the legislation process is moving towards changes in laws that we believe will encourage the use of d2w type technologies. It is pleasing to see in this region a positive commercial result from this medium-term investment strategy that has helped increase volumes by 25% with an indication of further strengthening going forward. In the Middle East, volumes were consistent with 2020 which was a good result as local plastic production volumes were reported to have decreased by more than 50% due to Covid-19 restrictions. We are also starting to see business return to pre-Covid-19 levels, and very soon the start of a biodegradable enforcement programme by the Saudi national standards organisation (which is more easily capable of being enforced following the cessation of Covid-19 restrictions which have been in place during the last 2 or so years). This we believe will also have a positive effect in surrounding countries and further afield.
Sales for d2w have now commenced in India following completion in February 2022 of the agreement in November 2021 to form a joint venture with Indorama Corporation together with a local manufacturing agreement. This opens an exciting and large opportunity as the Indian government are taking immediate steps to control plastics through new regulations that are expected to encourage the use of compostable and biodegradable products like d2w. We look forward to providing further updates on this regulation and commercial progress during 2022.
Investment into the many d2p “Designed to Protect” technologies and products has continued throughout the year and whilst various programmes have progressed, the enhancement of the US FDA approval is undoubtedly a significant milestone upon which we will build our sales. Health Canada adds to this important food approval process for use in bread packaging, thus opening two very large potential markets plus other territories which follow FDA regulations. Although the commercial and sales development process has been slower than anticipated, it continues to progress satisfactorily. Long-term sales based upon current negotiations could potentially be a multiple of the Group’s current revenue. Further announcements are expected to be made in the near term and throughout 2022.
In addition to plastic packaging applications, we continued to advance the development and regulatory process of a d2p antimicrobial/antiviral nitrile glove with Meditech. This process is expected to complete during 2022 following which we will start marketing and selling to known customers in the UK, EU and USA where we have already ongoing negotiations dependent on the completion of regularity approvals.
I would like to thank the Board, our staff, and distributors for all their hard work in advancing the business through globally challenging times into a period where many of our developments become commercial and cash-generative.
The Board continue to be optimistic that the future performance of Symphony Environmental, particularly financially will improve materially during 2022 and beyond.
N Clavel
Interim Chairman
