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Q4 should not have been (from an earnings/p&l perspective) been much impacted by the final unwind of the hedge. At end Q2 the loss on the hedge was written off up to the then gold price of $1,780 oz and a $14m “provision” established that would have reversed as income in Q3 and Q4. On reflection, I think the drop in Q4 Adjusted EBITDA was down to the various drilling campaigns which, given they are exploratory, get expensed as they drill.

I had been hoping for around a $20m profit after tax for the second half of 2020 (in contrast to $1m for the first half). I think perhaps $10-15m is more likely but we shall see with the prelims hopefully as usual next month. It will help institutional investor attention to record a more than nominal profit for 2020 (along, of course, with the anticipated dividend).

(Comments are about p&l/EBITDA accounting. They still only got $1,250 oz cash for the hedged sales.)

I do not hold any particular torch for SYM’s management. However, it is worth remembering that they said in September that they were running over 100 trials with companies for d2p. So they have achieved a fair degree of success in marketing. Whether those trials result in orders will be down to the efficacy and suitability of the product.

The question going forward should be what is the status of those trials given a number of months have elapsed?

Difficult to understand why Adjusted EBITDA fell so much from Q3. VAT still trundling up at about $2.3m per quarter. When will the govt conclude on their VAT audit? It has been about six months since they did it.

It is a sale. Fryer now has no shares. However, difficult to read much into director sales as opposed to buys.

Register with meetthecompany, and search on that website for xeros.. The webinar they did in September should still be available. That is quite informative.

Sorry bread bags not Brad bags.

DavidLaw. You raise some very interesting points. On a recent meetthecompany webinar there was a question about the d2p technology and if there were patents. From memory, I think Laurier suggested they might go for the odd patent but were concerned that in obtaining a patent they might reveal the technology and it could then be copied in China, India etc. Whether, that was the real reason I don’t know but, like you, I have never been able to find any details on the technology (whether I could understand it is another matter). I think not disclosing it is deliberate.

As you say their videos are rather amateur (similarly for d2w) perhaps to keep costs down as they have for many years hovered around break even. The website also could do with an upgrade. I think, however, for marketing they largely rely on the fact that they are very embedded in the plastics world and they have around 70 worldwide distributors operating in 100 countries. I assume that is how they have got the 100 trials, which may be as much as they can cope with right now.

Your point on Microban not being viricidal is very interesting (plus all the enquiries they have had about it). It seems that they use a silver additive, which I think is traditional, and so perhaps implies that SYM has a different and superior additive. On potential harm and leachate I think considerable comfort can be drawn from the FDA approval of the d2p variant intended for Brad bags. It has taken 10 years to obtain and no doubt the process was very rigorous.

SYM is a micro company and will be constrained by resources but it seems to me that having 100 trials, a number of which surely should be with some large companies is an excellent start. However, I think we need to know more about them. Questions for Laurier at the next webinar.

In its interims SYM reported that it had £1.0m orders for PPE in the second half and more importantly were running more than 100 d2p trials with companies. The PPE orders may be relatively small but it has to be remembered that not so long ago there was a desperate worldwide shortage for any PPE at all. People tend not to be receptive to upgrades in such circumstances - they just want something that works reasonably well as before and they want it now. The significant opportunity for SYM is likely to be when the pandemic comes under control and governments have more time to look at how the response can be improved and start thinking about how to prevent the next virus.

The 100 trials is significant, particularly as SYM has only developed its d2p products quite recently (not too far before the pandemic). Many of these trials are likely to be with large organisations that need to be more certain of a product’s efficacy ie not just accepting a standard Market accreditation which smaller firms would be tempted to do . The hope has to be that even if a few of these trials are successful the resulting orders will be significant. With SYM’s financial leverage the impact on profit would be significant.

Thanks Thordon. I see from Michael Stephen’s column https://www.symphonyenvironmental.com/wp-content/uploads/2020/07/Coronavirus-Plastic-Litter-Bahrain-and-Polymateria-–-Bioplastics-News.pdf
that he thinks that Polymateria is using essentially an oxo biodegradable process. I had wondered that when a while back I looked at their website but could not determine as they were not explicit on their technology. Stephen has said subsequently that he welcomes the new standard Polymateria has been promoting in association with WRAP. It will be interesting to see where someone with the heft of Bolland can take their product in the UK - which may well be to the advantage of SYM even if a competitor. I still remain a bit confused as to whether it is oxo degradable rather than oxo BIOdegradable products that the EU is trying to ban. If just the former SYM is OK but as I said before they are not focused on or operative in that market.

It is perhaps also worth noting that new recycling techniques are coming into force for oil based plastic. The Times has reported four new pyrolysis plants to be built in the UK and Portsmouth University and a French company, Carbios, are working on using enzymes (which should be commercially operative in a couple of years or so). Both techniques involve extracting the oil from the plastic and as I understand it leave contaminants and additives (such as SYM adds) behind. If this is the case then two major objections to the fact SYM’s d2w technology involves oil based plastics should drop away. Firstly, that it uses non-renewable fossil fuels and secondly that it hinders recycling (SYM have always said that this can be dealt with by stabilisers). Then the focus should fall back to the fact that d2w deals with littering which is the major concern around plastic.

As Thordon notes SYM’s products seem to have lost out in Europe to plant/starch based products largely due to politics (although I am not sure that a ban has yet come in) . In its half year results SYM more or less said it did not have great hope for European sales. However, SYM has sold very little in Europe so it is lost opportunity rather than sales. At the moment SYM’s main markets for d2w are in emerging markets where waste collection/recycling systems are often very poor and littering is high. The opportunity for SYM here is very significant and they have the Established distributor network To make it work.

It is amazing the EU is so pro plant/starch based plastic. Here, is an EU report form March 2020 https://bioplasticsnews.com/wp-content/uploads/2020/06/kh0420187enn.en_.pdf. It is pretty damming on such plastics - high carbon footprint, needs specific facilities, needs longer to compost than expected and if not fully composted can result in micro plastics remaining in the compost. A graphic on page v of the Exec Summary indicates that outside niche uses such plastic is detrimental.

Gemlotte. I think that is an important point. Laurier in the recent(ish) meetthecompany webinar seemed to say d2p was about 5x more profitable than d2w. I think I got that right (stand to be corrected), although it did seem very high. He also said about 15% of sales were d2p. They seemed to be almost nil at the half year so I think he was talking about the September position. So the d2p sales seems to be coming through post 30 June and are accelerating.

Thanks. Never heard of this person but it was a useful summary (if rather hurried) of the bull points for SYM. He picks up on the point that there are 100 customer trials ongoing. That has been said before but I did not realise it was only for d2p.

Summary details of PAS 9017. Note what it does not cover - in particular efficacy in the marine environment.

https://shop.bsigroup.com/ProductDetail?pid=000000000030414052

Lootgaloot. I think you would have to ask SYM that directly. The secret sauce has not been revealed, as far as I know, on their website or in their communications.

As for patents I don’t think there are any. The “moat” around the technology is the fact that customers do not adopt it easily (viz the need for quite extensive trials) and the need, in some cases for regulatory approval (viz FDA approval for bread bags).

They have actually done these types of presentatIons before - in particular I think they have been a regular at UK Investor (the show founded by Winnifrith). However, this time they have very much more to talk about. In the past there has been a good deal of puff but the interims had some decent granular detail on eg customer trials. I have been in this stock for more years than I care to admit and just possibly we are now at the hoped for turning point. It is a very high margin business so new revenue falls substantively to profit

Those posters should come back. Next week is normally when SYM announces its interim results so they stand a chance of being right. Obviously the results have to be out by end September, The results are known but it is the comments on outlook that are relevant.

Thanks Trojan. The dividend point is interesting as I cannot imagine that Liberum would have written that without tacit approval from Shanta. The diversification point is also very valid and being overlooked by the market.

The buyback ability was there before eg see page 147 of 2019 annual report, page 97 of 2018 annual report. 100m shares. Probably for all years since float. As has been said, it is quite routine.

The tax is a fair point but I think really it is the $27m of operating cash flow that matters (and of course that is just for half a year). As you say the tax charge is bumped up by $4m of prior year adjustments but also by a similar amount because the economic loss on the hedges is not deemed tax deductible for ordinary trading (this has not been explained before). Both these issues should not reoccur next year and the tax charge should more approximate the statutory rate of 30%.

It does feel a bit that the Tanzanian government are hunting around to get cash out of Shanta now it has funds. All the more reason for Shanta to declare a dividend next year and gear up a bit on Singidia.