Symphony Environmental achieves further significant steps towards commercialisation

Symphony Environmental Technologies Plc (LON:SYM) global specialists in technologies that make plastic and rubber products “smarter, safer and sustainable”, has announced a trading update for the year ending 31 December 2022, subject to final deliveries to be shipped before year-end and completion of the audit.

Group revenue for FY-22 is expected to be approximately £6.5 million (2021: £9.2 million). This follows, as previously advised, a soft first half of the year with results affected by short term logistics and resource issues, temporary destocking issues, and a change to our glove strategy. Whilst the second half of the year has been stronger, the Middle East destocking issue has still not been resolved mainly due to delays in receiving the requisite government certifications for our partner’s new factory in the UAE, which finally became fully operational in December. It is anticipated that this will be fully resolved during Q1 2023.

Pleasingly, strong momentum in d2p sales continues with revenue in FY-22 expected to be approximately £0.8 million, representing at least 80% year-on-year growth (2021: £0.4 million). The increase in FY-22 d2p sales has mainly been due to continued conversion of higher value d2p anti insect (“AI”) product.

This lower FY-22 revenue figure is expected to result in a Group loss after tax of approximately £2.5 million in FY-22 (2021: £1.4 million). 

However, and continuing that reported in the Group’s interim results (announced on 29 September 2022), these financial results for FY-22 do not reflect the operational progress made during the year, and the outlook for the Group remains as positive as previously described, albeit with further significant steps towards commercialisation having been achieved. Based upon the Group’s trading performance in December 2022 and that trending for Q1-23, the Board expect Symphony to move back into profitability during this period. This confidence is underpinned by:

–       Symphony India commenced commercial supply of d2p bread technology and is also on track to reach £250k of d2w revenues monthly by the end of Q1-23. This increase is being driven by the Plastic Waste Management Rules 2022 (as amended on 6 July 2022) which permits government-approved biodegradable plastic products to be exempted from restrictions that would ban most plastic film products unless they are more than 50-microns thick, and 120 microns for carrier bags. Symphony’s d2w technology has been tested by Intertek India, an Indian government approved laboratory, and whilst Symphony India continues to wait for official approval that plastic producers using d2w technology will be become certified suppliers, customers have recently commenced placing orders, and in increasing volumes.

–       New Middle East factory became fully operational in December. Locally produced products are cheaper and also preferred by the market and our customers in the region. Accordingly, we expect to deliver substantially increased volumes into the region in H1-23 and beyond

–       Improved gross margins achieved during Q4-22 due to a sustained reduction in raw material prices

Additionally, and as advised within the Group’s interim results, the Board remains confident it will achieve a £14m annualised run-rate revenues during H1-23 where, after many years of R&D and product development, commercialisation of several near-term active pipeline opportunities (excluding India) is expected in the very near term. The current segmental analysis of expected revenue growth is as follows:

Initiative (excluding sundry items)FY-21 revenueFY-22     revenueNear term annualised expected revenue
d2w biodegradable (excluding India)£7.2m£5.2m£9.0m
d2p AM bread technology£0.1m£2.5m
d2p AI technology£0.1m£0.5m£1.0m
d2p general pipeline£0.2m£0.2m£1.0m
d2p gloves£1.0m£0.0m£0.5m

Our medium to long term sales pipeline remains substantially higher than our near-term annualised sales pipeline of £14 million.

The Board is acutely aware that these multi-year projects do not fit neatly into reporting periods. Whilst the returns on these projects will be highly profitable, the Company’s financial performance in any given reporting period is affected by the timing of these projects, particularly so in respect of FY-22.

The near-term commercialisation of our projects and resultant sales are significant, with profitability anticipated within Q1-23 we are increasingly confident in delivering positive updates in this regard during 2023.

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