Symphony Env. Regulatory News (SYM)

23 Mar 2005 07:00

Symphony Plastic Technologies PLC23 March 2005 SYMPHONY PLASTIC TECHNOLOGIES PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2004 Symphony Plastic Technologies plc, the degradable plastics company, is pleasedto announce its preliminary results for the year ended 31 December 2004. HIGHLIGHTS • Turnover up 16% to £8.86m (2003: £7.63m) • Operating loss after exceptional costs down 80% to £0.60m (2003: £2.92m) • Operating loss before exceptional costs down 59% to £0.50m (2003: £1.22m) • Gross profits increased by 55% to £1.84m (2003: £1.19m) • Loss per share decreased to 1.31 pence from 7.09 pence • Success in the High Court Commenting on the results, Nirj Deva, Chairman of Symphony, said: "I am pleased to report good turnover growth and a material reduction in theoperating loss of the Group during a year that was overshadowed by litigation inthe High Court. The second half of the year was also affected by globalincreases in energy and raw material costs. Environmental and public pressure on governments and corporations around theworld continues to increase, raising awareness of the problems of plastic wasteand therefore the importance of the introduction of degradable plastics.Symphony is well positioned internationally and technologically to capitalise onthese opportunities as they arise." For further information, please contact: Symphony Tel: 020 8207 5900Michael Laurier, CEO Ian Bristow, FD Citigate Dewe Rogerson Tel: 020 7638 9571Patrick Toyne-Sewell Ged Brumby Further information on Symphony Plastic Technologies plc Symphony develops and markets environmentally responsible plastic packagingproducts and additives, which are distributed primarily to the retail, localauthority and health related sectors. The Group's main technology, d2w(R),allows plastic to degrade, leaving only water, a minimal amount of carbondioxide and trace amounts of non-toxic biomass over a controlled time period.The current d2w(R) product range now includes degradable additives, carrierbags, refuse and waste sacks, mailing wrap, stretch film, aprons, and packagingfilms. Further information on Symphony can be found at www.degradable.net. CHIEF EXECUTIVE'S REVIEW The year under review has been particularly challenging as raw material costsnearly doubled and a large part of management time in the second half of theyear was occupied with defending litigation which was aimed at affecting ourcore technology and business. I am pleased to report that despite thesedistractions we have continued to increase sales and have significantly reducedlosses from the previous year. Symphony has continued to expand its international distribution network for itsfinished polythene products and additives. To date we have 8 distributors andour d2w(R) products can be found in more than 20 countries. TRADING RESULTS Total group sales increased by 16% to £8.86m. Group gross profits increased by55% from £1.19m to £1.84m. The Group continued to allocate most of its marketingand sales efforts to the further development of d2w(R) product sales, whilstalso maintaining and increasing the level of non-degradable business. The operating loss in 2004 was reduced significantly to £0.6m from £2.92m in2003. In 2003, £1.7m was written off due to the termination of our licence withEPI Environmental Products Inc ("EPI") and the estimated cost of the case in theHigh Court. As the case is going to appeal, a further £100,000 provision hasbeen made in 2004 in respect of anticipated non-recoverable legal fees. Research and development tax credits totalling £105,000 were received during2004 and these are included in tax on loss on ordinary activities in the profitand loss account. The operating loss before exceptional costs was £0.5m, having reducedsignificantly from £1.22m in 2003. Administrative expenses before exceptionalcosts were £2.05m, which is 12% down from last year, as a result of tight costcontrol. Gross profits increased by 33% before exceptional costs, from £1.39m to£1.84m. The loss per share decreased significantly to 1.31 pence from 7.09 pence. Dispute between Symphony and EPI As announced on 21 December 2004, Symphony was successful in the High Court onthe major points of the action taken by EPI. In January 2005, EPI completedpayment of a total of £670,000 into Court and was subsequently grantedpermission to Appeal. The costs will remain in Court until the Appeal processhas been exhausted. We remain confident that the action is unmeritorious andthat the Appeal Court will reaffirm the judgment that was made in our favourlast December. International Markets Symphony has continued to expand its international sales activities with agrowing product range. The d2w(R) degradable products and additives are beingdistributed in Brazil, the Caribbean, Middle East, New Zealand and South Africa.In addition other new overseas markets have started to buy our products andadditives. The Group has completed significant distribution agreements for NorthAmerica, Saudi Arabia and Columbia in 2005, which further extends the geographicreach of the d2w(R) range of products and additives. Sales prospects are being encouraged by changes in legislation and increasingenvironmental concerns over plastic pollution. UK Sales Symphony continued to target viable sectors where d2w(R) products willstrategically fit. In particular the retail sector consumes large volumes of plastic and last yearwe supplied over 1 billion d2w(R) carrier bags. We also supplied products into the private health, local government andindustrial films sectors, but most of the work achieved last year was in producttrials and developing further relationships. Financing During the year £0.6m was raised by way of share issues in July and November.Since the year end, and subject to an extraordinary general meeting on 31 March2005, £1.7m has been placed. This new funding places Symphony in a strongfinancial position with a strengthened balance sheet and the working capitalrequired to take full advantage of the opportunities in our markets. Legislation Increasingly legislators and officials around the world are realising that theywill never be able to collect and process all their plastic waste, and policiesare needed to encourage a move to degradability. They are also realising thatoxo-biodegradable plastic can be recycled and can itself be made from recycledplastics. Oxo-biodegradable plastics also have a lower cost base thanstarch-based biodegradable materials and have a wider range of applications. Legislation that has been passed in countries such as Barbados, Malta,Mauritius, Bangladesh, India and Taiwan, includes: use of non-biodegradableplastic bags being a punishable offence; having lower taxation charges on bagsmade from degradable plastic; split import duty levels for degradable andnon-degradable bags, with higher levels on the latter; and the banning ofplastics completely. These actions have all encouraged interest in degradablematerials. In November a major international conference was held in Brussels at whichscientists acknowledged the benefits of oxo-biodegradable plastic and recognisedthat a European Standard was needed for plastics which degrade by a process ofoxidation. This conference was attended by Symphony's technical team, andSymphony is at the forefront of discussions with the EU Commission and theEuropean Standard Organization. In the UK, farmers and growers can burn or bury plastic waste on farm, but thiswill have to stop in June 2005 when the draft Waste Management Regulations areexpected to come into force. This could potentially open up further markets forour range of d2w(R) films and additives. Outlook We have continued to make progress in passing on raw material price increases toour customers and have succeeded in recovering most of the additional costs. Recent price increases are being implemented at a much faster pace as themarkets are more prepared to accept these changes than before. The 2005 year has started well with new orders and distribution agreements beingconfirmed. In recent months deliveries of d2w(R) products have been made to somelarge international companies in the leisure sector, which will allow our brandto have further exposure to a large retail consumer base. Symphony's d2w(R) products can be found in more than 20 countries throughout theWorld. Our strategy is to expand the international distribution network and ourestablished partners are reporting good levels of activity in terms of productenquiry, trials and order negotiation. The UK sales activities are focussed on developing closer relationships with "key" customers and to expand the reach of d2w(R) into new sectors and products.The health care, local authority, supermarket and mailing film sectors areexpected to expand as we negotiate for product extensions within the currentsupply arrangements. Legislation is moving at a steady pace and the focus is on changing the habitsof governments and consumers of all types of plastic packaging products. Ourview is that Symphony is well placed to supply the solutions to the problemsthat governments are now starting to tackle, and with d2w(R) products availableat either zero or little "on-cost", there is no commercial reason not to makethe change to degradable plastics. Michael LaurierChief Executive CONSOLIDATED PROFIT AND LOSS ACCOUNT For the year ended 31 December 2004 Year ended Year ended 31 December 2004 31 December 2003 £'000 £'000 £'000 £'000 Turnover 8,855 7,628 Cost of sales - other (7,013) (6,243)Cost of sales - exceptional item - (196)Cost of sales (7,013) (6,439) Gross profit 1,842 1,189 Distribution costs (283) (281) Administrative expenses - other (2,054) (2,325)Administrative expenses - exceptional item (100) (1,501)Administrative expenses (2,154) (3,826) Operating loss (595) (2,918) Net interest (132) (91) Loss on ordinary activities before taxation (727) (3,009) Tax on loss on ordinary activities 105 - Loss for the financial year transferred from reserves (622) (3,009) Basic and diluted loss per share in pence (1.31)p (7.09)p There were no recognised gains or losses other than the loss for the financialyear. CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2004 2004 2003 £'000 £'000Fixed assetsIntangible assets 15 1Tangible assets 203 209Investments 16 16 234 226 Current assetsStocks 380 593Debtors 3,397 2,111Cash at bank and in hand 1 170 3,778 2,874 Creditors: amounts falling due within one year (2,763) (1,828) Net current assets 1,015 1,046 Total assets less current liabilities 1,249 1,272 Creditors: amounts falling due after more than one year (41) (25) 1,208 1,247 Capital and reservesCalled up share capital 513 453Share premium account 9,116 8,593Other reserves 822 822Profit and loss account (9,243) (8,621) Shareholders' funds 1,208 1 1,247 CONSOLIDATED CASH FLOW STATEMENT For the year ended 31 December 2004 2004 2003 £'000 £'000 Net cash outflow from operating activities (1,049) (1,435) Returns on investments and servicing of financeInterest received - 4Interest paid (128) (91)Interest element of finance leases and hire purchase (5) (4) Net cash outflow from returns on investments and servicing of finance (133) (91) Taxation 105 - Capital expenditure and financial investmentPayments to acquire intangible fixed assets (15) -Payments to acquire tangible fixed assets (8) (57)Receipts from sale of fixed assets 4 18 Net cash outflow from capital expenditure and financial investment (19) (39)Cash outflow before financing (1,096) (1,565) FinancingIssue of equity share capital 60 111Share premium on issue of equity share capital 565 1,889Share issue expenses (42) (192)Capital element of finance leases and hire purchase (22) (58) Net cash inflow from financing 561 1,750 (Decrease)/increase in cash (535) 185 NOTES TO THE PRELIMINARY STATEMENT Preliminary Results for year ended 31 December 2004 1 BASIS OF PREPARATION The preliminary announcement has been prepared on the basis of accounting policies consistent with the audited financial statements for the year ended 31 December 2004. 2 LOSS PER SHARE The calculation of basic loss per share is based on a loss for the year of £622,000 (2003: £3,009,000) divided by the weighted average number of shares in issue during the year of 47,526,432 (2003: 42,421,388). 3 PUBLICATION OF NON-STATUTORY ACCOUNTS The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The balance sheet at 31 December 2004 and the profit and loss account for the year then ended have been extracted from the Group's financial statements upon which the auditors opinion is unqualified. The 2003 financial statements have been filed with the Registrar of Companies, but the 2004 financial statements are not yet filed. This information is provided by RNS The company news service from the London Stock Exchange