Member Info for Hounddog10

M365. The Colonel is right (he normally is) although it is not specifically contractual. Page 15 of the 2019 accounts: “As of the end of the year, the Company had sold forward 40,000 oz to June 2020 at an average price of US$1,244/oz. These forward sales were entered into during late 2018 and were considered prudent given the Company’s contractual debt repayments through to June 2020, with the gold price presenting an asymmetric risk in the event of decline.”

So you are looking at the price of hedges which were taken out over a year ago when POG was very much lower. Details of the hedges on page 60. Seems sensible to me and nothing nefarious.

Poptart. All part of the fun in investing in the AIM market........

Tucky. I suspect you are right that the pivot is now to d2p. However, they did increase sales 56% in Q1 and that seemed to be almost entirely due to d2w, although in Q2 sales have fallen back during the Covid crisis.

They are a much more resilient company now they have a range of products.

I think it cuts both ways. Yes it is a competitor but there is a very large untapped market with plenty of room for a number of players. The headwinds for SYM have always been those who want plastic banned entirely, starch based plastics and some in the recycling industry that fear worse feedstock. Having another high profile player pushing back on these issues may well help.

Interestingly, this company says that its process is not oxo biodegradable but something different. It did seem to me that it was quite close in process and it is similar in concept in that it is an additive to oil based plastic.

Actually, I thought Laurier did a good interview. Quite matter of fact rather than the spin which we have had down the years. He did look tired though. Hopefully, because of all the orders he is about to deal with.

It looks as though they have gone quite significantly into PPE with £950k of orders, seemingly ramping up quickly. They describe this as “finished products” so somewhat different from their existing business of supplying additives. Presumably the margins are different but no hint of what they are. With their distributor network SYM are well placed to do so.

I would imagine that d2p is going into apron PPE - makes a lot of sense - but not seen any information on it. Not sure the aprons get reused much. I think they generally get used once and then discarded. Not good for the planet but good for SYM I suppose. Doubt biodegradation comes into it as It is medical waste which I think is mainly incinerated for hygiene reasons.

I never understand how companies/Nomads can justify these sweetheart deals with related parties as “fair and reasonable” but it is all too common on AIM. Nothing has been received in return for extending the warrants. However, I suppose it does imply that they think that the share price may be at least 20p by end November.

Out of interest do you have a particular reason to think that? There does not seem to be any need for capital absent a strategic move or large organic ramp up in business. Thanks.

Seems to be some stirrings of life in this. Still under the radar.

Oxo. And one further point per your post: Bilbo (sic) does not have a d2p contract with SYM and neither does the United States (the USA has simply approved its use). The bread bag additive is in trials with potential customers. There are no contracts (yet) for this product. Please read the RNS.

Oxo. I really have not the slightest idea what you are talking about. Why is it you have to be so rude? What of my estimates do you disagree with?

Oxo. To clarify. I was pointing out that SYM has a customer worth 25% of its sales. This was disclosed in the 2018 accounts where all revenue was d2w. I remember Grupo Bimbo being announced as a major customer many years back and I think at one point SYM quantified the revenue. I have therefore presumed that it is the 25% customer. My point was that if Bimbo was to cease to be a customer then 25% of revenue would be lost but that it was more likely that there was a sell in for SYM of its new d2p bread bag additive on top of d2w.

The attached link details SYM’s relationship since 2008 when they got d2w going with Bimbo in Mexico City. Bimbo is described as the largest bakery company in the world with $15bn sales.

https://www.symphonyenvironmental.com/resource/grupo-bimbo-presents-progress-of-its-d2w-biodegradable-packaging-program/

A couple of other points:

- About a quarter if SYM’s sales are to one (long standing) customer. Although the name is undisclosed it is almost certainly d2w To Gruppo Bimbo, which is a very large international Mexican bakery products company. I think SYM supplies them with d2w for bread bags. There is obviously a risk here but also an opportunity with the new FDA approved additive. I would guess that Bimbo is one of the companies SYM is running trials with.

- A major competitor of SYM is Wells Plastics, a private PE backed company. Slightly different model as it manufactures. To June 2018 Wells had sales of £13.5m and profit of £2m. It’’s sales and profits have been rising steadily over the last few years. It’s 2919 accounts are due very shortly and from what they said in 2018 they were expecting a good year. Although this is competition for SYM the whole market is at such an early stage it more illustrates SYM’s potential if they get it right.

For the last few years SYM has had sales of c£8m, gross margin of c50% and costs of around £4m. It has therefore oscillated between a small profit and a small loss (2019 said to be £0.5m loss). SYM does not manufacture and leaves the majority of the sales effort to its distributors. Therefore, as sales increase there should be little in the way of a costs increase. So, for the sake of argument, if sales increase 50% (in line with first quarter) to £12m this year that theoretically could be around £2m to the bottom line (probably more like £1.5m after a bit of cost increase). This illustrates that if SYM gets even a few million of extra sales it should make a very significant impact on profitability. And there is no tax because of all the losses in the early years.

They said in a recent RNS that most of their trade debtors are credit insured. It is a valid question but historically bad debts, even after the financial crisis have not been a problem for SYM. However, would not be surprised if they take the odd hit although I think it will be small.

This is a surprisingly good update from SYM. I normally view their RNSs with intense suspicion but this seems to indicate some traction. It is worth remembering that they made £4.1m in the first half last year - so the second quarter was much better than the first. In the past half years have been quite consistent and possibly that applies to quarters. If inventories are low then that is a good base to keep up the sales increase which is said to be organic. Plus of course the bread bag additive which should commercialise soon.

Longer term the virus will turn people’s attention to contamination of surfaces and whether additives can help. As viruses spread exponentially anything that even has even a small effect in reducing initial infection Can make a substantial difference.

I see from another BB that SYM is suing the BBC over its coverage. Mail on Sunday article on 21st. Article suggests they are after millions. Wonder how they will finance the action. - but there are many more litigation funders available nowadays.

Today The Sunday Times is reporting the fund raising will start next week and it is to be a Pacing and Open Offer with clawback. I would guess the underwriters have gone down this route (rather than a RI) as it opens up the fund raining to new investors and can complete more quickly than a RI. This should significantly reduce the risk for the underwriters. However, the question is how much leverage on the placing price have the placees managed to bring to bear.

Does anyone know what expectations are for 2019 (which, perhaps prematurely, they have reaffirmed)? Someone mentioned £1m ‘net income’. PAT?

No judgment yet but now 7 months from end of trial so decent chance before end of year, perhaps even next month. Complex case with many points of evidence and law.

I see on the BBC the Coop has moved to compostable bags with the BBC presenter thinking this meant they were not plastic. It will be interesting to see what happens if problems start to emerge eg littered compostable bags are found not to biodegrade in the open environment and whether they biodegrade in home rather than industrial composting.