ANNUAL REPORT
ANNUAL REPORT
AND ACCOUNTS
AND ACCOUNTS
Symphony Environmental Technologies plc
Symphony Environmental Technologies plc
2018
2018
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SyMPhONy
SyMPhONy
dEVELOPS ANd
dEVELOPS ANd
PROdUCES A
PROdUCES A
WIdE RANGE OF
WIdE RANGE OF
TEChNOLOGIES,
TEChNOLOGIES,
TO mAkE PLASTIC
TO mAkE PLASTIC
SmARTER
SmARTER
Plastic litter is a worldwide problem in terrestrial
Plastic litter is a worldwide problem in terrestrial
and marine environments in particular, where a
and marine environments in particular, where a
staggering 8 million tonnes of plastic litter ends up
staggering 8 million tonnes of plastic litter ends up
each year with devastating consequences for wildlife
each year with devastating consequences for wildlife
and environmental quality.
and environmental quality.
Symphony are committed to helping reduce
Symphony are committed to helping reduce
unnecessary plastic and re-using and recycling
unnecessary plastic and re-using and recycling
wherever possible, but, some plastic will always
wherever possible, but, some plastic will always
escape collection and end up in the natural
escape collection and end up in the natural
environment, where it could persist for 100 years.
environment, where it could persist for 100 years.
Symphony’s d2w technology was invented - to
Symphony’s d2w technology was invented - to
make sure that if plastic does escape into the open
make sure that if plastic does escape into the open
environment it will biodegrade much more quickly
environment it will biodegrade much more quickly
than ordinary plastic.
than ordinary plastic.
Products made with d2w have all the benefits of
Products made with d2w have all the benefits of
conventional plastic that we have grown accustomed
conventional plastic that we have grown accustomed
to, but with the added advantage that if they escape
to, but with the added advantage that if they escape
collection and end up in the natural environment
collection and end up in the natural environment
as litter they will degrade and biodegrade (i.e. be
as litter they will degrade and biodegrade (i.e. be
bio-assimilated by bacteria and fungi) on land
bio-assimilated by bacteria and fungi) on land
or sea in the same way as nature’s wastes.
or sea in the same way as nature’s wastes.
In addition to d2w we have a range of protective
In addition to d2w we have a range of protective
technologies marketed under the d2p (designed
technologies marketed under the d2p (designed
to protect) logo.
to protect) logo.
This year has seen several new commercial
This year has seen several new commercial
applications for d2p technologies. These include
applications for d2p technologies. These include
a range of products for the health and hygiene
a range of products for the health and hygiene
market, a complete antimicrobial toothbrush, and
market, a complete antimicrobial toothbrush, and
insoles for trainers and running shoes incorporating
insoles for trainers and running shoes incorporating
antimicrobial and odour-adsorbing technologies.
antimicrobial and odour-adsorbing technologies.
Our products are sold through a network of
Our products are sold through a network of
distributors in nearly 100 countries worldwide.
distributors in nearly 100 countries worldwide.
BUSINESS REVIEW
BUSINESS REVIEW
01 Highlights 2018
01 Highlights 2018
02 Symphony at a Glance
02 Symphony at a Glance
04 Chairman’s Statement
04 Chairman’s Statement
06 Chief Executive’s Review
06 Chief Executive’s Review
10 2018 Roundup
10 2018 Roundup
11 Corporate Social Responsibilty
11 Corporate Social Responsibilty
12 Strategic Report
12 Strategic Report
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
13 Principal Risks and Uncertainties
13 Principal Risks and Uncertainties
14 Board of Directors
14 Board of Directors
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Chairman’s Corporate
Chairman’s Corporate
Governance Statement
Governance Statement
24 Directors’ Report
24 Directors’ Report
26 Directors’ Responsibilities Statement
26 Directors’ Responsibilities Statement
27 Audit Committee Report
27 Audit Committee Report
28 Remuneration Committee Report
28 Remuneration Committee Report
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
30 Independent Auditor’s Report
30 Independent Auditor’s Report
33
33
Consolidated Statement of
Consolidated Statement of
Comprehensive Income
Comprehensive Income
34
34
Consolidated Statement of Financial Position
Consolidated Statement of Financial Position
35
35
Consolidated Statement of Changes in Equity
Consolidated Statement of Changes in Equity
36 Consolidated Cash Flow Statement
36 Consolidated Cash Flow Statement
37
37
Notes to the Annual Report and Accounts
Notes to the Annual Report and Accounts
58
58
Company Statement of Financial Position
Company Statement of Financial Position
59
59
Company Statement of Changes in Equity
Company Statement of Changes in Equity
60
60
Notes to the Company Statement
Notes to the Company Statement
of Financial Position
of Financial Position
64 Company Information
64 Company Information
hIGhLIGhTS 2018
Financial Highlights:
Group revenues increased by
6.5% to £8.80 million
(2017: £8.27 million)
d2p revenues increased by
191% to £0.93 million
2017: £0.32 million)
d2w revenues were broadly stable at
£7.67 million
(2017: £7.78 million)
Gross profit increased by
2.8% to £4.13 million
(2017: £4.01 million)
Adjusted EBITDA, before R&D,
and planned increased marketing,
communications and brand costs of
£1.18 million
(2017: £1.20 million)
Reported profit before tax fell to
£0.04 million
(2017: £0.43 million)
Basic earnings per share fell to
0.03p
(2017: 0.28p)
Cash used in operations
£1.01 million
(2017: cash generated £1.03 million)
Net current assets increased to
£1.71 million
(2017: £1.25 million)
Business Highlights:
Ten governments globally have mandated that certain plastic
products must contain oxo-biodegradable additives; a regulatory
move which is beneficial to the Group’s business
A further nine countries have introduced positive regulation
for all types of bio-degradable packaging with more
countries intending to make similar changes
Increasing interest in d2w type products as a result
of middle East regulations and enforcement thereof
First d2p anti-insect technology
commercial order
Eranova (plastic from algae) due-diligence
and commercial discussions ongoing
01
SyMPhONy AT A GLANCE
AN INTERNATIONAL GROUP, WITH PRESENCE
IN NEARLy 100 COUNTRIES WORLD WIDE
A scientifically proven
biodegradable technology
The addition of d2w converts ordinary polymer (at the
end of its useful life and in the presence of oxygen) into a
material which is biodegradable in the open environment.
d2w is a masterbatch that is added to polymer
during manufacture.
Added at only 1% means little or no extra cost
d2w has the same characteristics as conventional polymer.
It is just as waterproof, lightweight, strong and flexible
Products can be made in existing plastic factories with
existing workforce and machinery
meets all relevant standards i.e. ASTm D6954, UAE 5009:2009
Saudi 2879 and AFNOR Accord T51-808
Will remain stable in storage conditions for the agreed shelf life
Is safe for direct food contact according to US and EU food
contact regulations
Can be recycled with conventional plastic
If products made with d2w end up in the open environment
as litter, they will harmlessly degrade and biodegrade
Straws made with
oxo-biodegradable plastic
www.d2w.net
02
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d2p is the brand name for a suite of masterbatches
offering extra protection to plastic products from
bacteria, insects, fungi, algae, odour, fouling and fire.
Antibacterial
Fights healthcare and food industry
infections. Tested against dangerous
organisms including mRSA, E-coli,
Listeria, Salmonella, Pseudomonas
and Aspergillus Niger.
Natural
Antibacterial suitable for use in
food and non-food applications.
In compliance with FDA Food and
Drug Administration, USA and
EFSA (European Food Safety
Authority) requirements.
Antimicrobial
The primary purpose is to prevent
bacterial and fungal contamination
whilst preserving the aesthetic
and functional properties of the
plastic article.
Anti-fouling
Anti-fouling paint is a specialised
coating applied to the hull of a ship
or boat to reduce the growth of
aquatic organisms.
Insecticide technology
Insecticidal plastic masterbatches
used to control pests. Typically
used in mosquito nets, agriculture,
horticulture, forestry and home
applications.
Pest control
Rodents can cause dangerous
damage to plastic products such as
cable insulation, warehouse pallets,
non-food packaging and boxes etc.
Symphony has developed additive
masterbatches with products that
repel these pests.
Oxygen Scavenger
d2p OS is a powerful inorganic
chemical compound, produced
from a natural ore and
manufactured to a high purity.
Flame retardant
Flame retardants decrease the
ignitability of materials and inhibit
the combustion process – limiting
the amount of heat released.
Vapour corrosion inhibitor
d2p VCI additives are a range of
products to be used in protection
of surfaces against the corrosion
ands oxidation of ferrous and
non-ferrous metals.
Ethylene adsorber
Highly active adsorbent
masterbatch for the removal
of undesirable odours, volatile
organic compounds (VOC)
and water vapour from plastic
packaging to reduce spoilage
of fruit and vegetables.
Odour adsorber
Inorganic masterbatches and
additives designed to inhibit the
development of odours in plastic
products and reduce spoilage of
fruit and vegetables.
Release agent
A modern synthetic product
produced from one of the most
common of the earth’s elements. It
plays a key role in the improvement
of the flow and processing of resins
as well an enhancing the slip and
lubricity of plastic products.
Protector toothbrush made with
d2p antimicrobial technology.
Business Dynamics (Pakistan)
Comfosole Insoles - made with
antimicrobial and odour-adsorbing
technologies. CPST (Korea)
www.d2p.net
03
ChAIRMAN’S STATEMENT
Nirj Deva, DL, FRSA, mEP
I am pleased to report on the
continued progress of the Group.
Our strategy remains unchanged,
with the objective of expanding
our product range with synergistic
technologies which can be offered to
the same or a similar customer base.
This continues to progress well with
Group revenues for the year increasing
by 6.5% to £8.80 million (2017: £8.27
million) due to a 191% growth in d2p
“designed to project” business from
£0.32 million to £0.93 million.
"ThE WORLd IS REThINkING ThE WAy PLASTIC
IS PROdUCEd, USEd ANd dISPOSEd OF"
We have developed a strong distribution network
with 72 distributors worldwide, covering nearly
100 countries; this represents an important asset
for the Group to leverage. In addition, Symphony’s
products are manufactured in four different locations
worldwide, enabling us to meet almost unlimited
demand without significant further investment.
During the year, our R&D spend increased modestly
from £0.63 million to £0.66 million. This included
specialist advice in relation to regulatory compliance
in the United States for two of our d2p technologies,
together with continued development in-house and
utilisation of specialist third-party facilities of our other
d2p technologies globally. We have developed a strong
and growing range of d2p products which provide
protection against bacteria, fungi, insects, corrosion,
odours, and fire. Further to the growth already
established, we believe that d2p will deliver strong
growth in the short to medium term.
Cash used in operations of £1.01 million (2017: cash
generated £1.03 million) was a result of a £1.22 million
increase in receivables during the period due to final
quarter trade weighted in December. Net current
assets increased to £1.71 million at the end of 2018
from £1.25 million at the end of 2017.
04
Symphony distributors Amir Younus and Jihad Ghanem
at the launch of the ‘Protector’ Antimicrobial toothbrush range
in November 2018
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European Business Summit – May 2018
As previously advised, we increased our marketing,
communication and brand activities which resulted
in a planned higher spend of £0.36 million in the year.
The world is rethinking the way plastic is produced,
used and disposed of, and is in many cases adopting
technologies such as d2w that are low cost and
non-disruptive to manufacture, and can be reused
and recycled at the end of their useful life, without
increasing CO2 emissions. The trend for change from
ordinary plastics to materials less harmful to the
environment is clearly evolving and we have seen a
sharp increase in interest from our global network of
distributors, customers and potential customers, for
many of our “making plastic smarter” technologies,
including from companies worldwide who have to
adopt technology such as d2w for their exports to
the Middle East.
Symphony’s business outside the EU accounts for
85.4% of revenues and therefore we believe that the
EU Draft Directive on “the reduction of the impact of
certain plastics on the environment” and in particular,
a restriction on oxo-degradables, if implemented,
would have a limited effect on Symphony’s business
going forward.
The draft directive aims to ban plastic products that
do not properly bio-degrade and are not recyclable,
which is not the case for our d2w products, as recently
confirmed by a QC and former UK judge after reviewing
the scientific evidence.
The Board continue to believe that increased marketing
and communications costs will prove to be a valuable
investment in the business over the medium to longer
term. Adjusting for R&D and the short-term budgeted
increased marketing, communication and brand
protection costs, EBITDA (as adjusted) for the year
was £1.18 million (2017: £1.20 million).
I would like to thank our distributors, staff and the
Board for all their hard and effective work in 2018,
and we look forward with confidence.
N Deva, DL, FRSA, MEP
Chairman
14 march 2019
05
ChIEF ExECUTIVE’S REVIEW
michael Laurier
The year under review saw growth in revenues
and continued profitability that included a
significant increase in investment in marketing
and communications, together with R&D.
Throughout the period we continued
to communicate globally at exhibitions,
conferences, in the media, and to governments,
NGOs and corporates by presenting the
considerable volume of evidence that is available
to support the credentials behind our growing
range of technologies, and in particular, d2w
oxo-biodegradable plastic, which can help
to resolve the problem of persistent plastic
pollution in the environment.
"REAChING A PIVOTAL PERIOd"
In our opinion, the Group is reaching a pivotal period
in its development. Whilst the d2w technology has
taken time to gain traction, principally due to having
to educate and create a market as well as wait for the
enactment of relevant regulation, current revenues
and moreover, expected growth, validate the time
and resource we have allocated to those markets.
The year under review saw further intention in the
Middle East to enforce laws which mandate the use of
technologies such as d2w for a wide range of everyday
products. This has created increased interest in our
d2w products, as exporters prepare their materials
to meet new import restrictions that make oxo-
biodegradable technology compulsory. I am pleased
to say that we are working with several large US, EU
and Asian corporations to help them through the
approval process for a wide range of packaging and
other products.
Whilst the quantum and timing of orders for d2w
additive is currently unclear, we anticipate significant
revenue uplift in 2019.
In addition, adoption of our d2p technologies is
starting to grow with increasing commercial sales
of antimicrobial gloves together with masterbatch
products for use in antimicrobial, odour adsorbtion
and insecticidal applications.
We continue to develop, test and trial new products
for each of our d2w and d2p technologies. During
the period under review, and in part reflecting
our confidence in the outlook of our d2w and d2p
technologies, we entered into a collaboration
agreement with Eranova SAS, who have developed a
unique technology and process which extracts starch
from algae for use with other materials. The resultant
starch will be used to produce bio-based, compostable
or biodegradable products. Further detail on these
developments is provided below.
" WE CONTINUE TO dEVELOP, TEST ANd
TRIAL NEW PROdUCTS FOR EACh OF
OUR d2w ANd d2p TEChNOLOGIES"
06
ChIEF ExECUTIVE’S REVIEW
michael Laurier
Our marketing and communication activities in 2018
included Symphony being an active panel member
at the European Business Summit event in Brussels
with an EU Commissioner, Coca Cola, and many other
influential organisations on the panel. Throughout the
year we increased our engagement with the European
Commission, European Council, European Parliament
and other officials including a number of MEP’s.
In the UK we increased our engagement with
The Secretary of State for the Environment and
DEFRA officials, the UK Treasury and other UK
government departments, and communicated with
all MP’s explaining the importance of our d2w oxo-
biodegradable technology as part of an overall solution
to the problem of plastic pollution.
Trading results
Group revenues increased by 6.5% to £8.80 million from
£8.27 million in 2017. Gross profit margins decreased
slightly to 46.9% from 48.5% in 2017 due to increased
lower-margin finished product sales. As a result, the
contribution from gross profit increased by 2.8% (to
£4.13 million from £4.01 million in 2017).
Costs increased by 16.8% to £3.85 million (2017: £3.30
million) due to increased R&D spend and increased
communication and marketing costs, together with
legal advisory costs in support of the d2w brand and
technology. Staff costs also increased during the
period in the marketing and technical departments.
The Group expensed R&D costs of £0.66 million in
2018 (2017: £0.63 million).
Adjusted EBITDA before R&D and the additional
communication and marketing costs is calculated
as follows:
Operating profit
Add: Depreciation
Amortisation
R&D expenditure
Planned increase in marketing,
communication and brand
protection costs
2018
£’000
64
81
16
664
357
2017
£’000
478
78
16
625
-
Adjusted EBITDA
1,182
1,197
Reported operating profit was £0.06 million (2017: £0.48
million) and profit after tax of £0.05 million (2017: £0.43
million) with basic earnings per share of 0.03 pence
(2017: 0.28 pence).
The Group’s primary selling-currency is the US Dollar
and therefore a strong dollar against sterling, our
reporting currency, is beneficial for the Group. The
Group self-hedges by purchasing goods in US Dollars
and utilises forward rate agreements to minimise
exchange risk. As at 31 December 2018, the Group had
a net balance of US Dollar assets totalling $1.10 million
(2017: $1.08 million). The Group is experiencing higher
exposure due to Sterling/US Dollar exchange rate
fluctuations as a result of the uncertainties currently
surrounding Brexit.
Balance sheet and cash flow
The Group had net debt of £0.08 million at 31
December 2018 (2017: net cash of £0.63 million). During
the year, the Group used cash of £1.01 million from
operations (2017: generated cash of £1.03 million). This
cash utilisation was mainly due to increased trade
receivables at the end of the year due to higher sales in
December. The increased receivables resulted in higher
borrowings of £0.45 million (2017: £0.00 million) due to
invoice discounting on a portion of these receivables.
Net current assets increased to £1.71 million at 31
December 2018 (2017: £1.25 million) principally due
to shares issued from the exercise of options and
warrants during the period.
d2w oxo-biodegradable technology
Revenues from d2w for the year totalled £7.67 million
(2017: £7.78 million). As announced on 12 October
2018, the timing of orders placed by distributors in our
principal market, the Middle East, has fluctuated quite
significantly from month to month during 2018 due
to changes in local enforcement actions. Our market
intelligence continues to indicate that there will be
more rigorous government enforcement in the short-
term. Whilst we are only in the third month of the
financial year, we are optimistic that sales will increase
significantly in the second half of the year. Activities in
Symphony’s other global markets are encouraging as
d2w revenues from sales in Central America, the Far
East, and Africa all grew ahead of budget.
The Board are confident on the outlook of d2w but are
also equally cautious given the volatility of orders placed
in the last 12+ months. However, based on the on-the-
ground intelligence, the Board are currently budgeting
d2w revenues for 2019 of not less than £8.9 million
whilst remaining hopeful that if the on-the-ground
intelligence proves correct, that this will translates into
significantly better enforcement and resultant d2w
orders, enabling Symphony to issue further positive
updates over the course of this year.
07
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ChIEF ExECUTIVE’S REVIEW
CONTINUED
Global regulatory framework for
oxo-biodegradable
Most of the countries in which we operate do not
have sophisticated waste-management systems
or composting or recycling facilities, and their
governments are therefore determined to deal with
plastics that escape collection and end up in the open
environment. Oxo-biodegradation is a scientifically
proven technology to address this particular problem,
and is required by law in the UAE, Saudi Arabia, Pakistan
and seven other countries. In addition, a further nine
countries have regulations in place requiring the use
of biodegradable packaging materials, of which oxo-
biodegradable is one.
d2w oxo-biodegradable plastic, is a non-disruptive
drop-in technology which is the lowest cost alternative
to ordinary plastics and retains all the benefits of
ordinary plastics while eliminating the environmental
risk if the plastic escapes collection and pollutes the
open environment.
As already noted, Europe is not a key market for d2w
sales, but we have invested significant funds into
communication, marketing and legal advisory costs
in relation to the d2w brand and technology to better
inform key decision makers in the region.
EU draft directive on “the reduction of the
impact of certain plastics on the environment”
2018/0172(COd) (the “directive”)
This draft Directive, if passed in April or May 2019,
allows up to two years for member states to pass
implementing legislation.
However, the European Union’s scientific body, ECHA,
has provided no scientific basis to support a restriction
on oxo-biodegradable plastic – see below.
The purpose of the Directive in relation to plastics,
as set out in Recital 16, is to restrict products which
do not properly biodegrade and thus contribute
to microplastic pollution in the environment, are
not compostable, negatively affect the recycling
of conventional plastic, and fail to deliver a proven
environmental benefit.
We take the view that nobody would wish to restrict
products which are proven to properly biodegrade in
the open environment, whether they are compostable
or not, and are compatible with plastic recycling and
deliver a real environmental benefit. We have robust
scientific evidence proving that d2w oxo-biodegradable
plastic does all of those things.
The European Chemicals Agency (“EChA”)
As set out in Articles 68-73 of the REACH Regulation
(EC) 1907/2006 there is a transparent and well-
established process in the EU for legal restrictions
on substances.
On 22 December 2017, the Commission, acting under
article 69(1) of REACH, requested ECHA to prepare a
restriction dossier because they thought that oxo-
degradable plastics created microplastics. That process
has not been completed, and no restriction dossier
has been published. Symphony and others submitted
a substantial dossier of scientific evidence, and on
30 October 2018, ECHA advised that they were not
convinced that microplastics are formed.
Currently therefore, no restrictions on oxo-degradable
or oxo-biodegradable plastics exist, and the European
Union’s scientific body has provided no scientific basis
for a restriction.
If, and only if, ECHA were to conclude that there are
grounds for a restriction, the process then provides for
consideration of the evidence by the Committees for
Risk Assessment (Article 70) and for Socio-economic
Analysis (71), and for public consultations, before a
decision can be taken under Article 73.
d2p “designed to protect” technologies
Revenues from Symphony’s d2p “designed-to-protect”
technologies were £0.93 million, significantly ahead of
the previous year (2017: £0.32 million). Our range of d2p
antimicrobial gloves are listed in several large, as well as
some smaller, retail outlets. We continued to generate
revenues from our d2p antimicrobial masterbatch
technology for water pipes, and after two years of
R&D and successful trials, Symphony shipped an initial
commercial order for d2p anti-insect masterbatch
technology to a very large global manufacturer of
commercial agricultural equipment. The value of
this first part-container order was $120,000, and the
finished products made with this d2p technology are
being marketed globally.
We continue to have many customer-led d2p
development projects, with applications including
antimicrobials, insecticide, flame retardant, odour
and moisture adsorbers, rodent repellents and
corrosion inhibitors. The Board are currently budgeting
d2p revenues for 2019 of not less than £1.1 million
but are cautious as to the exact timing of further
product commercialisation and growth in newly
established areas.
08
ChIEF ExECUTIVE’S REVIEW
CONTINUED
" MOST OF OUR REVENUES dERIVE FROM
d2w BUT OUR d2p BUSINESS GREW By 191%"
Designed-to-protect range
Eranova
We are still conducting due-diligence in respect
of a proposed subscription in the Eranova project
to make plastic from algae. As part of this work,
we are evaluating potential partners for full-scale
manufacturing which would begin after completion
of a pilot-plant in the EU.
The key benefits of the Eranova technology are:
using a natural renewable waste product which
pollutes beaches;
a non-food-based resource (compared to corn
or potatoes); and
higher yields per hectare due to the fast growing-rate
of algae compared to food-crops.
This technology would complement Symphony’s
growing range of environmental packaging solutions.
Brexit
The Board has considered the possible effects of Brexit
on the business, and at the current time believe that
Brexit will not have a material impact on the operations,
financial performance or future prospects of the Group.
The principal reasons for this are the Group’s global
operations, and the fact that 85.4% of the Group’s
revenues were generated outside the EU mainland
in 2018 (2017: 90.5%). However, the Board continues to
monitor the Group’s operations in the UK and Europe in
light of potential challenges arising from Brexit and the
current political and economic uncertainties.
Outlook
We believe the Group is reaching a pivotal point in its
development. In particular, our Middle East market
is increasing the number of products which must be
made with our d2w type of oxo-biodegradable plastic
technology, whilst at the same time substantially
improving their enforcement process. We are confident
that this will translate into materially higher sales of
d2w going forward. We are also experiencing a positive
global effect with noticeable increases in enquiries from
potential customers around the world, many being
blue-chip companies, for products that will comply
with oxo-biodegradable legislation in the Middle East
and elsewhere.
We are encouraged by the growth of our d2p
“designed-to-protect” technologies in a number of
different applications. We expect not only significant
growth but expect them to be joined by new product
developments which we anticipate commercialising
in the short-term.
We have high expectations for a commercially
successful 2019 and beyond and look forward to
updating on positive progress made during the year.
M Laurier
Chief Executive
14 march 2019
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2018 ROUNdUP
It’s been a very busy year
This year the media has been dominated by stories of plastic pollution in the marine
environment. David Attenborough, presenting Blue Planet II, brought the plight of the
oceans to the attention of the world as we witnessed plastic litter killing wildlife and
destroying habitats.
80% of the plastic found in the oceans originates on
land, which is why we are passionate in spreading the
word about d2w oxo-biodegradable technology. Less
plastic accumulating on land would mean less plastic
finding its way into the oceans of the world.
2018 was a very busy year, in January a short film was
produced by BBC Storyworks explaining the benefits
of d2w oxo-biodegradable plastic. This film is available
around the world via the BBC Story works website.
In April, we exhibited at the UK Investor show and
hosted a Smart Plastic Event at Saddlers Hall in
central London (to coincide with the Commonwealth
Business Forum), again to explain the benefits
of oxo-biodegradable plastic and to present the
results of a YouGov survey. Findings of the survey
were overwhelmingly positive for adopting oxo-
biodegradable technology as a replacement for
regular plastic for all single-use/short-life products.
A similar survey in Mexico gave the same results.
A couple of weeks later we were back at Saddlers Hall
for the launch of new antimicrobial gloves developed
for the health and food industries with d2p technology.
This was the first product to be launched in a range of
Health & Hygiene merchandise produced by Symphony
distributor, Business Dynamics.
In early June Symphony took part in a forum in Mexico
where various research and studies on microplastics
were presented. We also celebrated World Oceans Day
with partners in the USA and in central London, where
our team of keen volunteers gave out samples of
d2w products, including straws and ponchos,
and talked to the public about the benefits of
oxo-biodegradable plastic and the difference
it could make in the environment.
In November many of our Distributors,
attended our 7th distributor conference
and (according to all of those who attended)
it was the best one yet. Over three days delegates
were informed about new research and products in
workshops and presentations.
10
On the last day Symphony distributor, Business
Dynamics held a press conference to launch the
world’s first - complete antimicrobial toothbrush.
Later in the month Symphony’s CEO and CFO were at
the Prince’s Trust ‘Waste to Wealth’ Summit. Where a
small exhibition stand was the starting point for more
conversations about the problems caused by plastic
litter in the environment.
Finally, at the end of November the new Symphony
website went live. We have streamlined and updated
the information presented to make navigation easier,
and will continue to develop the site further during the
coming year.
We are expecting 2019 to be equally busy with more
product developments and collaborations as well as
our participation in the K Show in Dusseldorf. We are
also looking forward to the conclusion of the Oxomar
project, a 3 year study which started in 2016, in France.
The study, looking into oxo-biodegradable plastic in
the marine environment is being carried out with the
support of the French government and l’observatoire
océanologique de banyuls sur mer.
For more information and updates, check out our
new website at
www.symphonyenvironmental.com
Promotional Leaf and
Seed Packet, designed to
demonstrate the difference
between Oxo-biodegradable
and conventional plastic.
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CORPORATE
SOCIAL RESPONSIBILITy
World Ocean Day - 8th June 2018
" AS A COMPANy, WE ARE COMMITTEd TO
REdUCING OUR ENERGy REqUIREMENTS
ANd WASTE yEAR ON yEAR ANd CAREFULLy
MONITOR ThE ENERGy WE CONSUME ANd
ThE WASTE WE GENERATE"
We believe in the principles of the circular economy
and are working towards reducing waste and avoiding
pollution either by design or intention and embedding
these principles into our business models and activities.
Our d2w oxo-biodegradable technology has been
specifically designed to be consistent with
these principles.
Our offices and laboratories use low energy lighting and
all products and equipment are responsibly sourced.
We are committed to recycling and have a dedicated
member of staff to monitor our recycling activities, as
well as following the principles of reduce, reuse and
recycle whenever practicable.
We work, as far as possible, with paperless
administration and use the best-practice document
management systems, utilising electronic
communications and video conferencing to reduce
postal costs and the need for business travel.
We also have production facilities in several locations
around the world to minimise the transport of
supplies and help reduce our carbon footprint.
As an organisation we are committed to the wider
community and regularly support charities and
fundraisers. This year, we were able to help a local
school in their project on the environment and helping
endangered species. We also gave donations to the
local foodbank, and to MacMillan Nurses and Crisis
at Christmas. As well as helping to raise money for
Magic FM’s appeal to buy Christmas Presents for
underprivileged children.
We currently have two students gaining valuable
experience in our laboratory as they complete their
professional training year in industry (an essential
part of their science degree courses). We also support
overseas students with similar placements, and
this year welcomed three students from Germany,
one in the laboratory and two in the administration
department. All of them were a great help and we
enjoyed the time they spent with us.
As ever, we are very keen to encourage our distributors
around the world to update and develop their skills.
In November we hosted our 7th distributor conference
and welcomed colleagues from many countries,
including China, Peru, UAE, Saudi Arabia, Lebanon,
Pakistan, USA, France, Portugal, Serbia, Costa Rica
and Korea who were able to catch up with old friends
whilst updating their skills and knowledge.
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STRATEGIC REPORT
Principal activities and business review
The primary business activities of the Group are the development and supply of environmental plastic additives and
products to a global market.
A review of the business is given in the Chairman’s Statement on pages 4-5 together with the Chief Executive’s
Review on pages 6-9 Future developments are summarised in the Outlook section of the Chief Executive’s Review
on page 9.
Key performance indicators
The Directors have monitored the progress of the overall Group strategy by reference to certain financial and non-
financial key performance indicators.
key performance indicator
2018
2017
method of calculation
Revenue (£’000)
8,802
8,267
Revenues for the Group
Gross profit margin (%)
46.9% 48.5%
The ratio of gross profit to sales
Adjusted EBITDA
1,182
1,197
EBITDA adjusted to view underlying operating performance
Number of distributors
72
74
Number of distribution agreements
Adjusted EBITDA being EBITDA before R&D and additional communication and marketing costs is calculated
as follows:
Operating profit
Add: Depreciation
Amortisation
R&D expenditure
Increased marketing, communication and brand protection costs
Adjusted EBITDA
2018
£’000
2017
£’000
64
81
16
664
357
478
78
16
625
-
1,182
1,197
These are discussed within the Chairman’s Statement and the Trading Results section of the Chief Executive’s Review.
Approval
The Strategic Report was approved on behalf of the Board on 14 March 2019.
M Laurier
Chief Executive
14 march 2019
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PRINCIPAL RISkS
ANd UNCERTAINTIES
The Board is responsible for developing a comprehensive risk framework and a system of internal controls. We have
identified the following as the principal risks and uncertainties the Group faces.
PRINCIPAL ACTIVITY
PRINCIPAL RISK
IMPACT
MITIGATION
Political and
Regulatory Risk
Negative government
policy
Publicity Risk
Negative media
comments
Market Risk
Market Competition
The Group may not be able
to market or sell products
in areas where there are
regulations in place which
favour other technologies
or are explicitly negative
towards the Group’s
technologies.
The Group’s products are
in a high profile area with
a number of organisations
competing for mainstream
technological acceptance.
This may lead to negative
comments in the media
who may prefer these
other technologies over
the Group’s.
The Group faces
competition from suppliers
of similar products which
could affect revenues and/or
gross margins.
The Group mitigates this risk
by having a large and well
established global footprint and
by being active in international
standards committees, as well
as liaising with appropriate
governmental departments.
The Group mitigates this risk
with active public relations
activities both in house and use
of external resources.
The Group mitigates this risk
by having a large number
of distributors globally who
can concentrate on any
competition issues within
their market, and also by
differentiating the Group and
its products by branding and
marketing activities.
Operational Risk
Commodity pricing
and availability
The Group uses commodity
and speciality materials
in the make-up of its
products. There is a risk of
price volatility and material
availability.
The Group mitigates this
risk by using more than one
supplier of its raw materials
and continually researching
separate supply alternatives for
the materials used.
Financial Risk
Foreign exchange
rate fluctuation
The Group mitigates this
risk by purchasing, where
practicable, in currencies to
match revenues. The Group
also has exchange facilities with
its bank to use as and when
appropriate.
The Group sells products
in many countries and
generates revenues in
US Dollars and Euros.
Foreign exchange rates
fluctuate and, as such,
assets created in foreign
currencies are liable to
constant revaluations into
their Sterling equivalent.
The Group is experiencing
higher exposure to US
Dollar fluctuations due to
the uncertainties currently
surrounding Brexit
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BOARd OF dIRECTORS
Nirj deva DL, FRSA, mEP
Non-Executive Chairman
Appointed to the Board: 15 may 2000
Committee Membership: None
BACKGROUND AND EXPERIENCE
Nirj Deva has been a member of the European Parliament since 1999 and is
vice-chairman of the Parliament’s International Development Committee. He is also
Chairman of the EU-China Friendship Group. From 1992 to 1997 he was a member of the
Uk Parliament. He has held a number of senior political appointments and has advised
the boards of a number of public companies including International Leisure Group,
Air Europe Plc, Tricentrol Oil Co Plc, EDS, Television South West, Thomas Howell Group,
John Laing Plc, Aitken Spence, and Rothmans International Plc.
Michael Laurier
Chief Executive Officer
Appointed to the Board: 4 December 1998
Committee Membership: None
BACKGROUND AND EXPERIENCE
michael Laurier is the Chief Executive of the Company. michael’s career began with
his long established family packaging business, Brentwood Sack and Bag Co Limited.
He took over responsibility for sales and production in the mid-seventies and changed
the emphasis of the company’s business from jute products to polythene packaging,
introducing the then innovative high density and medium density polythene bags
into the Uk market in 1975. He co-founded Symphony Plastics in 1995.
Ian Bristow FCCA
Chief Financial Officer and Company Secretary
Appointed to the Board: 4 December 1998
Committee Membership: None
BACKGROUND AND EXPERIENCE
Ian Bristow was in private practice for seven years, qualifying as a Chartered
Certified Accountant in 1992. In 1994, he joined Brentapac Uk Plc until it was
sold in 1994. He went on to co-found Symphony in 1995 and has been Finance
Director/Chief Financial Officer and Company Secretary of the Group
since inception.
Michael Stephen LL.m
Commercial Director & Deputy Chairman
Appointed to the Board: 3 August 2007
Committee Membership: None
BACKGROUND AND EXPERIENCE
michael Stephen was a member of the Uk Parliament from 1992 to 1997 and was a member
of the Trade and Industry Select Committee and the Environment Select Committee of
the House of Commons. He is Commercial Director and Deputy Chairman of the plc, and
Chairman of its subsidiary companies since 2007. He qualified as a Solicitor with Distinction
in Company Law. He was called to the Bar, and practised from chambers in London for
many years, dealing with civil cases in the High Court and Court of Appeal.
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Nicolas Clavel
Independent Non-Executive Director
Appointed to the Board: 16 October 2008
Committee Membership: Audit (Chairman), Remuneration
BACKGROUND AND EXPERIENCE
Nicolas Clavel started his career in international banking in the mid-seventies and
his area of expertise has been structured trade finance and equity investments with
a particular focus on Emerging markets. He is Chief Investment Officer of Scipion
Capital Ltd., (the Investment manager of Scipion African Opportunities Fund SPC).
Nicolas is Swiss, and is based in London and Geneva.
Shaun Robinson
Non-Executive Director
Appointed to the Board: 19 December 2014
Committee Membership: Audit, Remuneration (Chairman)
BACKGROUND AND EXPERIENCE
Shaun Robinson has over 25 years’ corporate finance, restructuring and active
asset management experience and is a Chartered Certified Accountant. Shaun
specialises in business development, m&A and tax/corporate structuring and
management oversight.
Robert (Bob) Wigley BSc, HonDBA, FCA
Independent Non-Executive Director
Appointed to the Board: 6 April 2018
Committee Membership: None
BACKGROUND AND EXPERIENCE
Bob is Chairman of Uk Finance, Secure Broadcast Ltd, Vesta Global Holdings Ltd,
Bink Ltd and Accloud Ltd. He is Non-Executive Director of the Qatar Finance Centre
Authority. From 2004-2009 he was Chairman of merrill Lynch EmEA. He is a former
member of the Court of the Bank of England and a former NED of Royal mail Group.
In 2009 he chaired the Green Investment Bank Commission for the then Chancellor
of the Exchequer. He is an Honorary Fellow of Judge Business School, Cambridge
University and a Visiting Fellow of Oxford University’s Saïd Business School.
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ChAIRMAN’S CORPORATE
GOVERNANCE STATEMENT
Dear Shareholder
As Chairman of the Board of Directors of Symphony Environmental Technologies PLC (“Symphony”, the “Company”, or,
together with the subsidiary companies, the “Group”), it is my responsibility to ensure that Symphony has both sound
corporate governance and an effective Board. As Chairman, my responsibilities include leading the Board effectively,
overseeing the Company’s corporate governance model, and ensuring that good information flows freely between Executives
and Non-Executives in a timely manner.
It is the Board’s job to ensure that Symphony is managed for the long-term benefit of all shareholders, with effective and
efficient decision-making. Corporate governance is an important part of that role, reducing risk and adding value to our
business. Our role as a Board is to create the conditions in which a resilient and successful business can continue to grow.
Annually we review and determine our strategy and business model and then continuously monitor how management
is implementing those plans. We review performance to ensure those plans remain on track or else are modified to take
account of unforeseen circumstances.
The Directors of Symphony recognise the value of good corporate governance in every part of its business. As Symphony is
an AIM listed company, it is required to adopt a recognised corporate governance code and disclose how it complies with that
code and, to the extent Symphony departs from the corporate governance provisions outlined by that code, it must explain its
reasons for doing so. The Directors have resolved to adopt the Quoted Companies Alliance Corporate Governance Code (the
“QCA Code”), which we believe is the most appropriate for a company of the size and stage of development of Symphony. The
Board considers that compliance with the QCA Code will enable us to serve the interests of all our key stakeholders, including
our shareholders, and will promote the maintenance and creation of long-term value in the Company. This report describes
our approach to governance, including information on relevant policies, practices and the operation of the Board and its
Committees. Additional detail is also provided in the corporate governance statement on our website.
The Board considers that Symphony complies with the QCA Code so far as is practicable, having regard to the Company’s
current stage of evolution. A statement detailing both how the Company complies with the QCA Code, and areas of
non-compliance, is outlined below.
qCA principles:
1. Establish a strategy and business model which
promotes long-term value for shareholders
The primary business activity of Symphony is the
development and supply of environmental plastic additives
and products to a global market. The Board has concluded
that the highest medium and long-term value can be
delivered to its shareholders through the Group’s strategy
of driving sales of its d2w range of products through its
network of distributors. In addition, the Board is focused
on increasing revenues generated by its d2p (designed to
protect) range of products and technologies.
The Board intends to deliver shareholder returns through
capital appreciation. Challenges to delivering strategy and
long-term goals are governmental policy (both preventative
and adoptive), market competition, foreign exchange
risks and raw material price volatility and availability, all of
which are outlined in Principle Risks and Uncertainties
on page 13, as well as steps the Board takes to protect the
Group, mitigate these risks and secure a long-term future
for the Group.
2. Seek to understand and meet shareholder needs
and expectations
Symphony places a great deal of importance on
communication with its stakeholders and is committed
to establishing constructive relationships with investors
and potential investors in order to assist it in developing an
understanding of the views of its shareholders. Beyond the
Annual General Meeting, the Chief Executive Officer (CEO),
Chief Financial Officer (CFO) and, where appropriate, other
members of the senior management team meet regularly
with investors and analysts to provide them with updates
on the Group’s business and to obtain feedback regarding
the market’s expectations of the Group.
The Group’s investor relations activities encompass dialogue
with both institutional and private investors. In addition, the
Company communicates with its shareholders through
its website, RNS and RNS Reach announcements, investor
relation web interviews, investor shows, and the Company’s
Annual Report and Accounts.
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The Annual General Meeting of the Company, normally
attended by all the Directors, provides the Directors the
opportunity to report to shareholders on current and
proposed operations, and enables the shareholders to
express their views of the Group’s business activities.
Shareholders are invited to ask questions during the
meeting and to meet with Directors after the formal
proceedings have ended. The CEO is considered the key
contact for shareholder liaison.
Information on the Corporate Information section of the
Group’s Information on the website,
www.symphonyenvironmental.com/corporate-
information, is kept updated and contains details of relevant
financial reports, presentations and other key information.
3. Take into account wider stakeholder and
social responsibilities and their implications for
long-term success
Symphony recognises that the Group’s long-term future
depends on environmental and social performance.
Excellence in operational performance generates financial
returns; however enduring sustainable growth depends
on being a responsible global citizen and earning the
continued support of our customers, shareholders,
communities and staff.
All of Symphony’s stakeholders are encouraged to provide
feedback to the Company by emailing info@d2w.net.
The Company is open to receiving feedback from key
stakeholders, and will take action where appropriate.
The Board recognises its responsibility to manage a
business whilst acknowledging the Group’s responsibility for
the environment and helping its customers make the most
environmentally-beneficial purchasing decisions. As the
whole concept of Symphony is built around sustainability
and commitment to the environment, we are constantly
searching for ways to continue to protect the natural and
human world. The Group’s strategy is focused on providing
environmentally-friendly plastic solutions, as well as plastic
solutions which augment healthcare, food preservation and
other human protection requirements, demonstrating the
Group’s commitment to Corporate Social Responsibility.
Furthermore, Symphony Environmental Limited (the
Company’s trading subsidiary) is BSI certified to ISO 9001
and 14001. The Group also has an Environmental Policy in
place and its d2w products have an Eco-label awarded by
ABNT, the Brazilian standards agency.
All employees within the Group are valued members of
the team, and the Board seeks to implement provisions to
retain and incentivise its employees. The Group offers equal
opportunities regardless of race, gender, gender identity or
reassignment, age, disability, religion or sexual orientation.
The Company’s Executive Directors regularly meet managers
to discuss staff comments, progress and well-being, and
employees are also encouraged to engage directly with
Directors. This allows the Board to obtain feedback from
employees. Symphony has Anti-Corruption and Health
and Safety policies in place.
Further information in relation to the Company’s corporate
social responsibility and copies of the above-stated policies
can be found on the Company’s website,
www.symphonyenvironmental.com/corporate-information.
4. Embed effective risk management, considering both
opportunities and threats throughout the organisation
The Board recognises the need for an effective and well-
defined risk management process and it oversees and
regularly reviews the current risk management and internal
control mechanisms. The Company’s key risks can be found
in Principle Risks and Uncertainties on page 13.
The Board has overall responsibility for identifying,
monitoring and reviewing the Company’s risks, and
assessing the systems of external control for effectiveness.
They are also responsible for updating and maintaining
the Company’s risk register, which evaluates the impact of
identified risks, as well as their mitigations. The Executive
Directors report any new or changed risks, and any changes
in risk management/control to the Board. The Board
discusses all business matters having regard to the risk for
the Group and to the extent that risks inherent in a particular
activity are considered significant, appropriate action is taken
and steps taken to mitigate the issue.
The Board is satisfied that the procedures in place meet the
particular needs of the Group in managing the risks to which
it is exposed. The Board is satisfied with the effectiveness of
the system of internal controls, but by their very nature, these
procedures can provide reasonable, not absolute, assurance
against material misstatement or loss.
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ChAIRMAN’S CORPORATE
GOVERNANCE STATEMENT CONTINUED
Protector Glove Launch – May 2018
The Board has delegated responsibility to the Audit
Committee for ensuring that the Company’s management
has designed and implemented an effective system of
internal financial controls and for reviewing, monitoring
and reporting on the integrity of the consolidated
financial statements of the Company and related financial
information. The Audit Committee will maintain effective
working relationships with the Board of Directors, executive
management, and the external auditors and will monitor
the independence and effectiveness of the auditors and
the audit. The Company has strict segregation of duties
and authority controls which are reviewed annually
by the auditors whom report their findings to the
Audit Committee.
The Board has reviewed the need for an internal audit
function and has decided that, given the nature of the
Group’s business and assets and the overall size of the
Group, the systems and procedures currently employed
provide sufficient assurance that a sound system of internal
controls are in place, which safeguards the shareholders’
investment and the Group’s assets. An internal audit
function is therefore considered unnecessary. However, the
Board will continue to monitor the need for this function.
5. Maintain the Board as a well-functioning,
balanced team led by the Chair
The Board comprises of three Executive Directors, Michael
Laurier, Ian Bristow and Michael Stephen, and four Non-
Executive Directors, Nirj Deva, Shaun Robinson, Nicolas
Clavel and Robert Wigley. Nirj Deva is the Company’s
Chairman. Nicolas Clavel and Robert Wigley are each
regarded as Independent Directors by the Board
notwithstanding that they hold a small number of shares
and also hold options over Ordinary Shares. The Board
considers that both Nicolas Clavel and Robert Wigley
have demonstrated the utmost regard for independence,
appropriately challenging the Board and maintaining high
standards of corporate governance on the Board. Neither
Nicolas nor Robert represent any shareholder on the Board
and both have a background in finance within regulated
industries. Accordingly, the Board believes that both Nicolas
and Robert exercise independent judgement in all matters
relating to the Company.
Nirj Deva has been a Director of the Company for 18
years and Shaun Robinson has an interest in Somerston
Environmental Technologies Limited, which has a holding
in excess of 20% in the Company. For these reasons they
are not considered independent as required by the QCA
Code. Both Nirj Deva and Shaun Robinson add value with
extensive knowledge of corporate, finance and public
affairs. The Board is satisfied it has a suitable balance
between independence on the one hand, and knowledge
of the Company on the other.
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ChAIRMAN’S CORPORATE
GOVERNANCE STATEMENT CONTINUED
Biographies for each of the Directors are outlined on
pages 14-15.
Board meetings are open and constructive, with every
Director participating fully. Senior management are also
invited to meetings when required, providing the Board
with a thorough overview of the Group. The Board aims
to meet at least four times in the year and, together with
the Audit and Remuneration Committees, deals with all
important aspects of the Group’s affairs. The Committees
have the necessary skills and knowledge to discharge
their duties effectively. The Group considers that, at this
stage of its development and given the current size of its
Board, it is not necessary to establish a formal Nominations
Committee. Instead, appointments to the Board are made
by the Board as a whole. This position, however, is reviewed
on a regular basis by the Board.
Attendance at Board and Committee Meetings for 2018 is
shown below.
In order to be efficient, the Directors meet formally and
informally both in person and by telephone. The Board
receives timely information in a form and of a quality
appropriate to enable it to discharge its duties. Board
papers are circulated by email with sufficient time before
meetings, allowing time for full consideration and necessary
clarifications before the meetings. Board papers are
compiled into a board pack for the meetings themselves.
All Directors of the Board have sufficient time, availability,
skills and expertise to perform their roles and this is regularly
reviewed by the Board. The Non-Executive Directors devote
such time as is necessary for the proper performance of
their duties and attend all Board meetings, unless prior
good reason is provided in advance.
The Company has two Committees, an Audit Committee
and a Remuneration Committee. The Committees have the
necessary skills and knowledge to discharge their duties
effectively. As with Board papers, Committee papers are
drafted and circulated to members of the Committee with
sufficient time before the meetings.
Attendance at Board and Committee Meetings for 2018
The Company has effective procedures in place to monitor
and deal with conflicts of interest. The Board is aware of
the other commitments and interests of its Directors, and
changes to these commitments and interests are reported
to and, where appropriate, agreed with the rest of the Board.
6. Ensure that between them the Directors have the
necessary up-to-date experience, skills and capabilities
The Company believes that the current balance of skills in
the Board as a whole reflects a very broad range of personal,
commercial and professional skills. The Directors’ varied
backgrounds and experience give Symphony a good mix
of the knowledge and expertise necessary to manage the
business effectively.
Ian Bristow is Symphony’s Company Secretary and is
responsible for ensuring that Board procedures are followed
and that the Company complies with all applicable rules,
regulations and obligations governing its operation, as well
as helping the Chairman maintain excellent standards of
corporate governance.
There are processes in place enabling Directors to take
independent advice at the Company’s expense in the
furtherance of their duties, and to have access to the advice
and services of the Company Secretary.
In order to keep Director skillsets up to date, the Board uses
third parties to advise the Directors of their responsibilities
as a Director of an AIM company, which includes receiving
advice from the Company’s nominated adviser and
external lawyers.
The Board proposes to introduce a facility for Directors
to receive training on relevant developments on a more
regular basis. The Board reviews the appropriateness and
opportunity for continuing professional development in
order to keep each Director’s skillset up-to-date.
Director
Position
Nirj Deva
Michael Laurier
Ian Bristow
Michael Stephen
Nicholas Clavel
Shaun Robinson
Robert Wigley
Non-Executive Chairman
Chief Executive Officer
Chief Financial Officer
Commercial Director & Deputy Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Board
meetings
Audit
Committee
meetings
Remuneration
Committee
meetings
5/5
5/5
4/5
5/5
4/5
5/5
4/5
1/2
2/2
1/2
2/2
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ChAIRMAN’S CORPORATE
GOVERNANCE STATEMENT CONTINUED
8. Promote a corporate culture that is based on ethical
values and behaviour
The Board recognises that its decisions regarding strategy
and risk will impact the corporate culture of the Group as
a whole and that this will impact performance. The Board
is aware that the tone and culture set by the Board will
greatly impact all aspects of the Group as a whole and the
way that employees behave. The corporate governance
arrangements that the Board has adopted are designed
to ensure that the Group delivers long term value to its
shareholders, and that shareholders have the opportunity
to express their views and expectations for the Group in a
manner that encourages open dialogue with the Board.
A large part of the Group’s activities are centred upon an
open and respectful dialogue with employees, customers
and other community and environmental stakeholders.
Therefore, the importance of sound ethical values and
behaviour is crucial to the ability of the Group to successfully
achieve its corporate objectives and successfully promote its
eco-friendly products. The Board places great importance
on this aspect of corporate life and seeks to ensure that this
flows through all that the Group does.
The Directors consider that at present the Group has an
open culture facilitating comprehensive dialogue and
feedback and enabling positive and constructive challenge.
The Executive Directors regularly meet managers and
discuss staff well-being, development and staff feedback.
Employees are encouraged to engage directly with
Directors, and the Group seeks to promote Group values
and behaviour through a top-down approach. Symphony
also has an employee handbook.
Furthermore, Symphony has a number of policies in place
aimed to protect its staff, such as Anti-corruption and
Health and Safety, as well as an Environmental Policy. The
Environmental Policy is focused on supplying the most
environmentally-beneficial products to its customers, and to
purchase and sell products which can be re-used, recycled
and will biodegrade, demonstrating the Company’s
commitment to its corporate social responsibility. As stated
above, Symphony’s trading subsidiary is also BSI certified to
ISO 9001 and 14001.
The Company has adopted a Share Dealing Policy which is
intended to assist the Company and its staff in complying
with their obligations under the Market Abuse Regulation
(“MAR”) which came into effect in 2016. The Policy addresses
the securities dealing restrictions set out in MAR and reflects
the requirements set out in the AIM Rules.
The Board will seek to take into account any Board
imbalances for future nominations. The Company is
committed to a culture of equal opportunities for all
employees regardless of gender. The Board aims to be
diverse in terms of its range of culture, nationality and
international experience. All seven Board members are
currently male. If it is agreed to expand the Board, the Board
will, subject to identifying suitable candidates, look to fill at
least one of the vacancies with a female Director.
If required, the Directors are entitled to take independent
legal advice and if the Board is informed in advance, the
cost of the advice will be reimbursed by the Company.
In addition to their general Board responsibilities, Non-
Executive Directors are encouraged to be involved in
specific workshops or meetings, in line with their individual
areas of expertise. The Board shall review annually
the appropriateness and opportunity for continuing
professional development, whether formal or informal.
7. Evaluate Board performance based on clear and
relevant objectives, seeking continuous improvement
The structure of the Board is subject to continual review
to ensure that it is appropriate for the Company. The
Board currently runs a self-evaluation process on Board
effectiveness. It is intended that the Board will create a more
formal Board evaluation process in the future, which will
focus more closely on defined objectives and targets for
improving performance.
In Board meetings/calls, the Directors discuss areas where
they feel a change would be beneficial for the Group taking
appropriate advice when required.
The Company has not yet adopted a policy on succession
planning, in particular with regard to the Company’s Chief
Executive, Michael Laurier. The Chief Executive is however
required to give one months’ notice under his contract of
employment if he wishes to leave the Company. The Board
will consider succession planning as part of its regular
review of Board effectiveness.
The Chairman will annually assess the individual
contributions of each of the members of the team to
ensure that:
their contribution is relevant and effective;
that they are committed; and
where relevant, they have maintained their independence.
The Board is committed to undertaking reviews of Board
and Committee performance and of individual Board
members which will be carried out every year as part of
a board performance evaluation. The first review, which
will include the identification of any training needs for the
Board, will be conducted during the first half of 2019.
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9. Maintain governance structures and processes that
are fit for purpose and support good decision-making
by the Board
The Board is committed to, and ultimately responsible
for, high standards of corporate governance, and has
chosen to adopt the QCA Code. We review our corporate
governance arrangements regularly and expect to evolve
these over time, in line with the growth of the Group. The
Board delegates responsibilities to certain Committees and
individuals as it sees fit.
The Chairman’s principal responsibilities are to ensure that
the Company and its Board are acting in the best interests
of shareholders, and leadership of the Board is undertaken
in a manner which ensures that the Board retains integrity
and effectiveness, with the right Board dynamic and
ensuring that all important matters, in particular strategic
decisions, receive adequate time and attention at
Board meetings.
The CEO has, through powers delegated by the Board, the
responsibility for leadership of the management team in
the execution of the Group’s corporate strategies and for the
day-to-day management of the business. The CEO can be
assisted in his duties by the other Executive Directors. The
CEO for Symphony is also the principle contact for liaison
with shareholders and, together with the CFO, all other
stakeholders.
The Non-Executives Directors are tasked with constructively
challenging the decisions of executive management and
satisfying themselves that the systems of business risk
management and internal financial controls are robust.
The Executive Directors seek regular counsel from the
Non-Executive Directors outside of Board meetings.
Whilst the Board has not formally adopted appropriate
delegations of authority setting out matters reserved to
the Board, there is effectively no decision of any
consequence made other than by the Directors. All
Directors participate in the key areas of decision-making,
including the following matters:
oversee the Group’s strategic objectives and policies;
review of performance and controls;
oversee all aspects of the finances;
decide on key business transactions;
manage risk; and
manage the interests of stakeholder groups.
The Board delegates authority to two Committees to assist
in meeting its business objectives whilst ensuring a sound
system of internal control and risk management. The
Committees meet independently of Board meetings.
The committees are currently being reviewed in relation
to the number of independent members.
Arabplast – January 2018
21
ChAIRMAN’S CORPORATE
GOVERNANCE STATEMENT CONTINUED
Audit Committee
Remuneration Committee
The Audit Committee Report is on page 27.
The Remuneration Committee Report is on pages 28-29.
Committee members and attendance
The Audit Committee currently comprises Nicolas Clavel
(Chair) and Shaun Robinson.
The Board considers that Nicolas Clavel has sufficient
relevant financial experience to chair the Audit Committee
given that he has over 30 years’ experience in financial
services and is Chief Investment Officer of Scipion
Capital Limited. Shaun Robinson is a Chartered
Certified Accountant.
The Committee is required by its terms of reference to
meet at least twice a year. The Committee Chairman may
invite other Directors or executives of the Company and
any external advisors to attend all or part of any meetings
as and when deemed appropriate.
Objectives and responsibilities
The Committee is responsible for monitoring the integrity of
the Group’s financial statements, including its Annual and
Interim Reports, preliminary results announcements and
any other formal announcements relating to its financial
performance prior to release.
The Committee’s main responsibilities can be summarised
as follows:
to review the Group’s internal financial controls and risk
management systems;
to monitor the integrity of the financial statements
and any formal announcements relating to the Group’s
financial performance, reviewing significant judgements
contained in them;
to make recommendations to the Board in relation to the
appointment of the external auditors and to recommend
to the Board the approval of the remuneration and terms
of engagement of the external auditors;
to review and monitor the external auditors’
independence and objectivity, taking into consideration
relevant UK professional and regulatory requirements;
to develop and implement policy on the engagement of
the external auditors to supply non-audit services, taking
into account relevant ethical guidance regarding the
provision of non-audit services by the external auditors;
and
to report to the Board, identifying any matters in respect
of which it considers that action or improvement is
needed, and to make recommendations as to steps to
be taken.
Committee members and attendance
Symphony’s Remuneration Committee is chaired by
Shaun Robinson and its other member is Nicolas Clavel.
The Board considers that Shaun Robinson has sufficient
relevant experience to chair the Remuneration Committee,
given that he is a Chartered Certified Accountant, with
over 25 years’ experience in the financial operation and
management oversight of a number of businesses.
The Committee is required by its terms of reference to
meet at least once a year. The Committee Chairman may
invite other Directors or executives of the Company and any
external advisors to attend all or part of any meetings as and
when deemed appropriate.
Objectives and responsibilities
The Remuneration Committee’s main responsibilities can
be summarised as follows:
To determine the framework or broad policy for the
remuneration of the Executive Directors, and such other
senior executives as it is requested by the Board to consider.
The remuneration of the Non-Executive Directors shall
be a matter for the executive members of the Board. No
Director shall be involved in any decisions as to their own
remuneration;
To determine such remuneration policy, taking into account
all factors which it deems necessary (including relevant
legal and regulatory requirements);
To review the ongoing appropriateness and relevance of
the remuneration policy, including policy comparisons with
market competitors;
To design and determine targets for any performance
related pay schemes operated by the Company and
approving the total annual payments made under
such schemes;
To review the design of, and any changes to, all share
incentive plans;
To advise on any major changes in employee benefits
structures throughout the Company or Group; and
To consider any matter specifically referred to the
Committee by the Board.
Terms of reference for the Audit and Remuneration
Committees are available at: www.symphonyenvironmental.
com/corporate-information/corporate-governance
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Nomination Committee
The Group considers that, at this stage of its development
and given the current size of its Board, it is not necessary
to establish a formal Nominations Committee. Instead,
appointments to the Board are made by the Board as a
whole. This position however, is reviewed on a regular basis
by the Board.
The Chair and the Board continue to monitor and evolve
the Company’s corporate governance structures and
processes, and maintain that these will evolve over time,
in line with the Company’s growth and development.
10. Communicate how the company is governed
and is performing by maintaining a dialogue with
shareholders and other relevant stakeholders
The Board is committed to maintaining effective
communication and having a constructive dialogue
with its shareholders, other relevant stakeholders and
prospective investors. The Company intends to have
ongoing relationships with both its private and institutional
shareholders (through meetings and presentations) as
well with shareholder analysts, and for them to have the
opportunity to discuss issues and provide feedback at
meetings with the Directors.
In addition, all shareholders are encouraged to attend
the Company’s next Annual General Meeting. All 2018
AGM resolutions were passed comfortably. The Board
already discloses the result of general meetings by way
of announcement, and discloses the proxy voting
numbers to those attending the meetings. The Company
has not historically announced the detailed results of
shareholder voting to the market but it intends to do so
for future General Meetings. The Board intends that, if
there is a resolution passed at a General Meeting with
20% or more votes against, the Company will seek
to understand the reason for the result and, where
appropriate, take suitable action.
The Corporate Information section of the Group’s
website, www.symphonyenvironmental.com/corporate-
information is kept updated and contains details of
relevant financial reports, corporate videos/ presentations
and other key information.
N Deva, DL, FRSA, MEP
Chairman
14 march 2019
23
dIRECTORS’ REPORT
The Directors present their report and the audited annual
report and accounts of the Group for the year ended 31
December 2018.
Principal activity
Symphony Environmental Technologies PLC is a public
limited company incorporated in England and Wales,
registered number 03676824, with registered office at
6 Elstree Gate, Elstree Way, Borehamwood, Hertfordshire,
WD6 1JD. The Company is quoted on the AIM market
of the London Stock Exchange.
The principal activity of the Group is the development and
supply of environmental plastic additives and products to
a global market.
Review of business
The Strategic Report on page 12 provides a review
of the business, the Group’s trading for the year ended
31 December 2018, key performance indicators, and an
indication of future prospects and developments. The
principal risks and uncertainties facing the business and on
page 13. The Directors as referred to in these annual report
and accounts are the directors of Symphony Environmental
Technologies PLC only.
Results and dividends
The trading results for the year and the Group’s financial
position at the end of the year are shown in the attached
annual report and accounts.
The profit for the year after taxation amounted to £48,000
(2017: £430,000).
The Directors do not recommend the payment of a
dividend (2017: £nil).
The results for the year ended 31 December 2018 are set
out in the consolidated statement of comprehensive
income on page 33.
Directors
The Directors who served during the year ended 31
December 2018 and up to the date of signing the financial
statements were as follows:
N deva, DL, FRSA, MEP
Non-Executive Chairman
M Laurier
Chief Executive Officer
I Bristow, FCCA
Chief Financial Officer and Company Secretary
M Stephen, LL.M
Commercial Director & Deputy Chairman
N Clavel
Independent Non-Executive Director
S Robinson
Non-Executive Director
R Wigley, BSc, HonDBA, FCA
Independent Non-Executive Director
In accordance with the Articles of Association, one third
of the Directors must retire from office at each AGM
after the AGM or general meeting, as the case may be,
at which he was appointed or last re-appointed.
Directors’ interests
The Directors in office at the end of the year, together with
their beneficial interests in the shares of the Company, were
as follows:
Ordinary Shares of £0.01 each
N Deva
M Laurier
I Bristow
M Stephen
N Clavel
S Robinson
R Wigley
At 31
December
2018
At 1
January
2018
363,925
23,424,510
1,163,925
1,352,176
550,000
11,513,546
200,000
363,925
23,424,510
1,163,925
1,352,176
550,000
11,331,783
-
Details of the Directors’ interests in options granted under
the Group’s share scheme are set out in the Remuneration
Committee Report on pages 28-29.
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Financial risk management policies and objectives
The Group’s financial risk management policies are detailed
in note 22 to the annual report and accounts.
A summary of the Group’s key operating risks is set out
on page 13. The Group’s risk management policies and
objectives including exposure to liquidity risk, interest rate
risk, currency risk, and credit risk, are contained in note 22 to
the annual report and accounts.
Share capital
Full details of changes in the Company’s share capital
during the year and after the year end are set out in note
16 to the annual report and accounts. Details of employee
share options and warrants are also set out in note 16.
Significant shareholdings
The significant shareholders in the Company (holding
shares in excess of 3%) as at 31 December 2018 are as follows:
Shareholder
% total shareholding
Somerston Capital
M Laurier
S Robinson
21.84%
15.18%
7.46%
Political donations
During the year ended 31 December 2018 the Group made
no political donations (2017: £nil).
Going concern
On the basis of current financial projections and available
funds and facilities, the Directors are satisfied that the Group
has adequate resources to continue in operational existence
for the foreseeable future and, accordingly, continue to
adopt the going concern basis in preparing the Group and
Company financial statements.
Information received by the Board
The Board receives information on a regular basis enabling
it to review operational and financial performance
(including sales activity,and working capital management);
forecasts (including comparison with market expectations);
potentially significant transactions and strategy.
Website
Our corporate website at www.symphonyenvironmental.
com/corporate-information/company-reports-and-
general-meetings provides access to Company information,
public announcements, published financial reports and
contact details.
Directors’ indemnification and insurance
The company’s articles of association provide for the
directors and officers of the company to be appropriately
indemnified, subject to the provisions of the Companies
Act 2006. The company purchases and maintains insurance
for the directors and officers of the company in performing
their duties, as permitted by section 233 of the Companies
Act 2006.
Auditor
Mazars LLP has expressed its willingness to continue in
office as auditor to the Company. A resolution to reappoint
Mazars LLP will be proposed at the forthcoming AGM.
Provision of information to the auditors
Each of the Directors who held office at the date of
approval of this Directors’ Report confirms that:
so far as he is aware, there is no relevant audit information
of which the Company’s and Group’s auditor is unaware;
and
he has taken all the steps he ought to have taken as a
Director in order to make himself aware of any information
needed by the Company and the Group’s auditors in
connection with their report and to establish that the
auditors are aware of that information.
AGM
The AGM will be held on 3 May 2019. The notice of AGM
and the ordinary and special resolutions to be put to the
meeting will be notified to shareholders separately from
these accounts.
Approval
The Directors’ report was approved on behalf of the Board
on 14 March 2019.
M Laurier
Chief Executive
14 march 2019
25
dIRECTORS’
RESPONSIBILITIES STATEMENT
The Directors are responsible for preparing the Annual
Report and the Group and Company financial statements
in accordance with applicable UK law and those IFRSs as
adopted by the European Union.
Under Company law the Directors must not approve the
Group and Company financial statements unless they
are satisfied that they present fairly the financial position,
financial performance, and cash flows of the Group and
Company for that period. In preparing those financial
statements, the Directors are required to:
Select suitable accounting policies for the group’s financial
statements and apply them consistently;
Each of the Directors, whose names are listed in the
Directors’ Report above, confirms that, to the best of
his knowledge:
The Group financial statements which have been
prepared in accordance with IFRSs as adopted by the EU,
give a true and fair view of the assets, liabilities, financial
position and profit of the Group.
The Strategic Report includes a fair review of the
development and performance of the business and the
position of the Group and the Company, together with
a description of the principal risks and uncertainties
that it faces.
Prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the Group
will continue in business;
The Directors consider that the Annual Report and
Accounts, taken as a whole is fair, balanced and
understandable.
This responsibility statement was approved by the Board
on 14 March 2019.
N Deva, DL, FRSA, MEP
Chairman
14 march 2019
Present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
Provide additional disclosures when compliance with the
specific requirements in IRFSs is insufficient to enable
users to understand the impact of particular transactions,
other events and conditions on the Group’s financial
position and financial performance;
State that the Group and the Company have complied
with IFRSs subject to any material departures disclosed
and explained in the financial statements; and
Make judgements and estimates that are reasonable
and prudent.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Group’s transactions and disclose with reasonable
accuracy at any time the financial position of the Company
and the Group and enable them to ensure that the financial
statements comply with the Companies Act 2006 and
Article 4 of the IAS regulation. They are also responsible for
safeguarding the assets of the Company and the Group and
hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors are responsible for the maintenance and
integrity of the Company’s website. Legislation in the UK
may differ from legislation in other jurisdictions.
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AUdIT COMMITTEE
REPORT
In the coming year, in addition to the Committee’s ongoing
duties, the Committee will:
consider significant issues and areas of judgement with
the potential to have a material impact on the financial
statements; and
keep the need for an internal audit function under review,
having regard to the Company’s strategy
and resources.
Significant issues considered for the year ending
31 December 2018
Revenue recognition and cut-off.
The Committee considered the application of IFRS 15 and
in particular the potential impact of timing on revenue
recognition over the accounting period end.
Audit committee effectiveness
The Committee is due to perform an assessment of its
effectiveness during the first half of 2019.
N Clavel
Chairman of the Audit Committee
14 march 2019
Dear Shareholder
As the Chairman of Symphony’s Audit Committee,
I present my first Audit Committee Report for the year
ended 31 December 2018, which has been prepared by
the Committee and approved by the Board.
The Committee is responsible for reviewing and reporting
to the Board on financial reporting, internal control and
risk management, and for reviewing the performance,
independence and effectiveness of the external auditors
in carrying out the statutory audit. The Committee
advises the Board on the statement by the Directors that
the Annual Report and Accounts when read as a whole
is fair, balanced and understandable, and provides the
information necessary for shareholders to assess the
Group’s performance, business model and strategy.
During the year, the Committee’s primary activity involved
meeting with the external auditors, considering material
issues and areas of judgement, and reviewing and
approving the interim and year end results
and accounts.
In addition, the Committee reviewed the audit and taxation
services provided by Mazars LLP, the Group’s external
auditors. The Committee concluded that Mazars LLP are
delivering the necessary audit scrutiny and that the taxation
services provided did not pose a threat to their objectivity
and independence.
Accordingly, the Committee recommended to the
Board that Mazars LLP be re-appointed for the next
financial year.
During 2018, the committee:
met with the external auditors to review and approve the
annual audit plan and receive their findings and report on
the annual audit;
considered significant issues and areas of judgement with
the potential to have a material impact on the financial
statements;
considered the integrity of the published financial
information and whether the Annual Report and Accounts
taken as a whole are fair, balanced and understandable
and provide the information necessary to assess the
Group’s position and performance, business model and
strategy; and
reviewed and approved the interim and year end results.
27
REMUNERATION
COMMITTEE REPORT
Dear Shareholder
As the Chairman of Symphony’s Remuneration Committee, I present my first Remuneration Committee Report for the year
ended 31 December 2018, which has been prepared by the Committee and approved by the Board.
The Committee is responsible for determining the remuneration policy for the Executive Directors, and for overseeing
the Company’s long-term incentive plans. The Board as a whole is responsible for determining Non-executive
Directors’ remuneration.
As an AIM company, the Directors’ Remuneration Report Regulations do not apply to Symphony and so this report is
disclosed voluntarily and has not been subject to audit.
Remuneration policy for 2018 and future years
The Remuneration Committee determines the Company’s policy on the structure of Executive Directors’ and if required,
senior management’s remuneration. The objectives of this policy are to:
Reward Executive Directors and senior management in a manner that ensures that they are properly incentivised and
motivated to perform in the best interests of shareholders;
Provide a level of remuneration required to attract and motivate high-calibre Executive Directors and senior management of
appropriate calibre;
Encourage value creation through consistent and transparent alignment of incentive arrangements with the agreed
company strategy over the long term; and
Ensure the total remuneration packages awarded to Executive Directors, comprising both performance-related and non-
performance-related remuneration, is designed to motivate the individual, align interests with shareholders and comply
with corporate governance best practice.
The Committee will continue to monitor market trends and developments in order to assess those relevant for the Group’s
future remuneration policy.
Remuneration policy for non-executive directors
Nirj Deva, Nicolas Clavel, Shaun Robinson and Bob Wigley each receive a fee for their services as a Director, which is approved
by the Board, mindful of the time commitment and responsibilities of their roles and of current market rates for comparable
organisations and appointments.
Remuneration decisions for 2018
No annual bonuses are payable for the year ended 31 December 2018 (2017: £nil).
As announced by RNS on 16 October 2018, and following advice from an independent remuneration consultant, myself and
Bob Wigley recommended to the Board to extend certain directors’ options for a period of one year. The options affected are
indicated in the share options and warrants table on page 29.
Remuneration committee effectiveness
The Committee is due to perform a self-assessment of its effectiveness during the first half of 2019.
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Directors’ emoluments
The table below sets out the total emoluments received by each Director who served during the year ended
31 December 2018.
N Deva
M Laurier
I Bristow
M Stephen
N Clavel
S Robinson
R Wigley*
Basic salary
£’000
Share-based
payments
£’000
Benefits
£’000
2018
Total
Emoluments
£’000
2017
Total
Emoluments
£’000
16
200
137
137
16
16
12
534
-
-
-
-
-
-
8
8
-
13
7
15
-
-
-
35
16
213
144
152
16
16
20
577
16
211
142
150
16
16
-
551
The Company has taken out insurance for its officers against liabilities in relation to the Company under Section 233 of the
Companies Act 2006. *Mr Wigley was appointed on 6 April 2018.
Share options and warrants
The Directors have share options and warrants, or interests in share options and warrants as follows:
N Deva
N Deva
M Laurier
M Laurier
I Bristow
I Bristow
M Stephen
M Stephen
N Clavel
N Clavel
R Wigley
Number of
share options or
warrants
Exercise price
(pence per
share)
1,500,000
250,000
1,851,500
350,000
3,000,000
280,000
2,000,000
210,000
500,000
250,000
750,000
4 . 50 0
9. 875
4 . 50 0
9.12 5
4 . 50 0
9.12 5
4 . 50 0
9.12 5
4 . 50 0
9. 875
20. 2 50
Exercisable from
Exercisable to
26 November 2008
18 December 2010
26 November 2008
31 March 2010
26 November 2008
31 March 2010
26 November 2008
31 March 2010
16 October 2009
18 December 2010
15 May 2018
*26 November 2019
18 December 2019
*26 November 2019
30 March 2020
*26 November 2019
30 March 2020
*26 November 2019
30 March 2020
**26 November 2019
18 December 2019
6 April 2021
The above share options and warrants are HM Revenue and Customs unapproved.
* Options were extended for one year to 26 November 2019 and ** Option was extended from 16 October 2018 to 26 November
2019. See Remuneration decisions for 2018 on page 28.
On 29 May 2018 Somerston Environmental Technologies Limited (“Somerston”) exercised 2,200,000 warrant options
(“Somerston Warrants”) at a price of 15.00 pence per share. Mr Robinson had a 15.3% interest in Somerston Warrants
representing 337,333 shares. The market value of these shares at exercise was 22.25 pence resulting in a gain of 7.25 pence per
share. (On 19 April 2017 Mr Stephen exercised 1,200,000 share options at the exercise price of 6.25 pence per share, the market
value of these shares at exercise was 9.75 pence resulting in a again of 3.5 pence per share).
S Robinson
Chairman of the Remuneration Committee
14 march 2019
29
INdEPENdENT
AUdITOR’S REPORT
to the members of Symphony Environmental Technologies plc
Opinion
We have audited the financial statements of Symphony
Environmental Technologies plc (the ‘parent company’)
and its subsidiaries (the ‘group’) for the year ended
31 December 2018 which comprise the Consolidated
Statement of Comprehensive Income, the Consolidated
Statement of Financial Position, the consolidated
Statement of Changes in Equity, the Consolidated Cash
Flow Statement, the Company Statement of Financial
Position, the Company Statement of Changes in Equity
and notes to the financial statements, including a
summary of significant accounting policies. The financial
reporting framework that has been applied in their
preparation is applicable law and International Financial
Reporting Standards (IFRSs) and, as regards the parent
company financial statements, as applied in accordance
with the provisions of the Companies Act 2006.
In our opinion:
the financial statements give a true and fair view of the
state of the group’s and of the parent company’s affairs as
at 31 December 2018 and of the group’s profit for the year
then ended;
the group financial statements have been properly
prepared in accordance with IFRSs as adopted by the
European Union;
the parent company financial statements have been
properly prepared in accordance with IFRSs as adopted
by the European Union and as applied in accordance
with the provisions of the Companies Act 2006; and
the financial statements have been prepared in
accordance with the requirements of the Companies
Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further
described in the Auditor’s responsibilities for the audit
of the financial statements section of our report. We are
independent of the company in accordance with the
ethical requirements that are relevant to our audit of the
financial statements in the UK, including the FRC’s Ethical
Standard, as applied to SME listed entities and we have
fulfilled our other ethical responsibilities in accordance with
these requirements. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide
a basis for our opinion.
The impact of uncertainties due to Britain exiting the
European Union on our audit
The Directors’ view on the impact of Brexit is disclosed on
page 9.
The terms on which the United Kingdom may withdraw
from the European Union, currently due to occur on 29
March 2019, are not clear, and it is therefore not currently
possible to evaluate all the potential implications to the
Group’s and Company’s trade, customers, suppliers and
the wider economy.
30
We considered the impact of Brexit on the Group and
Company as part of our audit procedures, applying a
standard firm wide approach in response to the uncertainty
associated with the Group’s and company’s future
prospects and performance.
However, no audit should be expected to predict the
unknowable factors or all possible implications for the
Company and this is particularly the case in relation to Brexit.
Conclusions relating to going concern
We have nothing to report in respect of the following
matters in relation to which the ISAs (UK) require us to
report to you where:
the directors’ use of the going concern basis of accounting
in the preparation of the financial statements is not
appropriate; or
the directors have not disclosed in the financial
statements any identified material uncertainties that
may cast significant doubt about the group’s or the
parent company’s ability to continue to adopt the going
concern basis of accounting for a period of at least twelve
months from the date when the financial statements are
authorised for issue.
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the
financial statements of the current period and include the
most significant assessed risks of material misstatement
(whether or not due to fraud) we identified, including those
which had the greatest effect on: the overall audit strategy,
the allocation of resources in the audit; and directing the
efforts of the engagement team. These matters were
addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
Revenue Recognition Description of the Key Audit Matter
The group’s accounting policy in respect of revenue
recognition is set out in the accounting policy notes on
page 37. Under this policy, revenue is recognised when
the stated conditions have been satisfied.
For Symphony Environmental Technologies Plc we see the
revenue recognition significant risk as being principally in
relation to cut off, due to the potential to inappropriately
shift the timing and basis of revenue recognition.
How we addressed this matter
We addressed this risk by substantively testing sales
recognised either side of the year end to ensure these have
been recognised in the correct period.
it procedures included, but were not limited to:
assessing the related internal control environment,
including specific controls that we considered to be key in
the determination of timing of revenue recognised; and
substantive analytical procedures, enquiry of
management, and corroboration of explanations provided.
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Substantive sampling procedures included, but were not
limited to:
selection of sample of transactions;
for each item selected assessing the right to and timing
of consideration by reference to shipment or delivery
documentation depending on the specific contractual
terms.
Based on the procedures performed, we found that the
revenue is fairly stated.
Our application of materiality
The scope of our audit was influenced by our application
of materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations,
helped us to determine the scope of our audit and the
nature, timing and extent of our audit procedures on the
individual financial statement line items and disclosures and
in evaluating the effect of misstatements, both individually
and on the financial statements as a whole. Based on our
professional judgement, we determined materiality for the
financial statements as a whole as follows:
Overall materiality
Group - £132,000
Parent company - £91,000
How we
determined it
Group – 1.5% revenue
Parent company– 2.7% net assets
Rationale for
benchmark applied
Turnover has been taken as the
benchmark for materiality for
the group as it is considered
to be the primary focus of the
shareholders as the group is
still at an early stage of profit
generation and was almost
break even for the year. 1.5%
was selected to reflect the
understanding of the risks.
Net assets was chosen as the
basis for the parent company as
it acts as the parent company of
the group and does not trade.
The 2.7% was used to reflect the
risk in the business.
Performance
materiality
Group - £92,000
Parent company- £64,000
Reporting
threshold
Group - £4,000
Parent company- £2,000
An overview of the scope of our audit
As part of designing our audit, we determined materiality
and assessed the risk of material misstatement in the
financial statements. In particular, we looked at where the
directors made subjective judgements such as making
assumptions on significant accounting estimates.
We gained an understanding of the legal and regulatory
framework applicable to the group and company, the
structure of the group and the parent company and the
industry in which it operates. We considered the risk of acts
by the company which were contrary to the applicable laws
and regulations including fraud. We designed our audit
procedures to respond to those identified risks, including
non-compliance with laws and regulations (irregularities)
that are material to the financial statements.
We focused on laws and regulations that could give rise
to a material misstatement in the financial statements,
including, but not limited to, the Companies Act 2006.
We tailored the scope of our group audit to ensure that we
performed sufficient work to be able to give an opinion on
the financial statements as a whole. We used the outputs
of a risk assessment, our understanding of the parent
company and group’s, accounting processes and controls
and its environment and considered qualitative factors in
order to ensure that we obtained sufficient coverage across
all financial statement line items.
Our tests included, but were not limited to, obtaining
evidence about the amounts and disclosures in the financial
statements sufficient to give reasonable assurance that the
financial statements are free from material misstatement,
whether caused by irregularities including fraud or error,
review of minutes of directors’ meetings in the year and
enquiries of management. As a result of our procedures,
we did not identify any Key Audit Matters relating to
irregularities, including fraud.
The risks of material misstatement that had the greatest
effect on our audit, including the allocation of our resources
and effort, are discussed under “Key audit matters” within
this report.
Our group audit scope included an audit of the group and
parent financial statements of Symphony Environmental
Technologies plc. Based on our risk assessment, all entities
within the group were subject to full scope audit and was
performed by the group audit team.
At the parent level we also tested the consolidation process
and carried out analytical procedures to confirm our
conclusion that there were no significant risks of material
misstatement of the aggregated financial information.
31
INdEPENdENT AUdITOR’S
REPORT CONTINUED
Other information
The directors are responsible for the other information.
The other information comprises the information included
in the Annual Report and Accounts 2018, other than the
financial statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover
the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing
so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge
obtained in the audit or otherwise appears to be materially
misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required to
determine whether there is a material misstatement in the
financial statements or a material misstatement of the other
information. If, based on the work we have performed, we
conclude that there is a material misstatement of this other
information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies
Act 2006
In our opinion, based on the work undertaken in the course
of the audit:
the information given in the Strategic Report and the
Directors’ Report for the financial year for which the
financial statements are prepared is consistent with the
financial statements; and
the Strategic Report and the Directors’ Report have
been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report
by exception
In light of the knowledge and understanding of the
group and the parent company and its environment
obtained in the course of the audit, we have not identified
material misstatements in the Strategic Report or the
Directors’ Report.
We have nothing to report in respect of the following
matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the
parent company, or returns adequate for our audit have
not been received from branches not visited by us; or
the parent company financial statements are not in
agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by
law are not made; or
we have not received all the information and explanations
we require for our audit.
Responsibilities of Directors
As explained more fully in the directors’ responsibilities
statement set out on page 26, the directors are responsible
for the preparation of the financial statements and for being
satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary to
enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group’s and the parent
company’s ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors
either intend to liquidate the group or the parent company
or to cease operations, or have no realistic alternative but to
do so.
Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of
these financial statements.
A further description of our responsibilities for the audit
of the financial statements is located on the Financial
Reporting Council’s website at www.frc.org.uk/
auditorsresponsibilities. This description forms part of our
auditor’s report.
Use of the audit report
This report is made solely to the company’s members
as a body in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken
so that we might state to the company’s members
those matters we are required to state to them in an
auditor’s report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the
company’s members as a body for our audit work, for this
report, or for the opinions we have formed.
Samantha Russell
Senior Statutory Auditor
for and on behalf of Mazars LLP
Chartered Accountants and Statutory Auditor
Tower Bridge House
St Katharine’s Way
London
E1W 1DD
Date: 14 March 2019
32
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CONSOLIdATEd STATEMENT
OF COMPREhENSIVE INCOME
for the year ended 31 December 2018
Revenue
Cost of sales
Gross profit
Distribution costs
Administrative expenses
Operating profit
Finance costs
Profit for the year before tax
Taxation
Profit for the year
Total comprehensive income for the year
Basic earnings per share
Diluted earnings per share
Note
4
5
7
8
9
9
2018
£’000
8,802
(4,676)
4,126
(210)
2017
£’000
8,267
(4,255)
4,012
(237)
(3,852)
(3,297)
64
(26)
38
10
48
48
478
(48)
430
-
430
430
0.03p
0.03p
0.28p
0.27p
All results are attributable to the parent company equity holders. There were no discontinued operations for either
of the above periods.
The accompanying notes form an integral part of these annual report and accounts.
33
CONSOLIdATEd STATEMENT
OF FINANCIAL POSITION
as at 31 December 2018 - Company number 03676824
ASSETS
Non-current
Property, plant and equipment
Intangible assets
Current
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
EQUITY AND LIABILITIES
Equity
Equity attributable to shareholders of Symphony Environmental Technologies plc
Ordinary shares
Share premium
Retained earnings
Total equity
Liabilities
Current
Borrowings
Trade and other payables
Total liabilities
Total equity and liabilities
Note
2018
£’000
2017
£’000
10
11
13
14
15
16
16
16
17
18
254
34
288
623
2,228
374
3,225
3,513
1,543
333
123
1,999
454
1,060
1,514
291
47
338
567
992
631
2,190
2,528
1,516
-
67
1,583
2
943
945
3,513
2,528
These annual report and accounts were approved by the Board of Directors on 14 March 2019 and authorised for issue on
14 March 2019. They were signed on its behalf by:
I Bristow, FCCA
Chief Financial Officer
The accompanying notes form an integral part of these annual report and accounts.
34
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CONSOLIdATEd STATEMENT
OF ChANGES IN EqUITy
for the year ended 31 December 2018
Equity attributable to the equity holders of Symphony Environmental Technologies plc:
For the year to 31 December 2018
Balance at 1 January 2018
Issue of share capital
Share-based payments
Transactions with owners
Total comprehensive income for the year
Balance at 31 December 2018
For the year to 31 December 2017
Balance at 1 January 2017
Issue of share capital
Capital reduction
Transactions with owners
Total comprehensive income for the year
Balance at 31 December 2017
Share
capital
£’000
Share
premium
£’000
Retained
earnings/
(deficit)
£’000
1,516
27
-
27
-
1,543
1,499
17
-
17
-
1,516
-
333
-
333
-
333
3,533
75
(3,608)
(3,533)
-
-
67
-
8
8
48
123
(3,971)
-
3,608
3,608
430
67
Total
equity
£’000
1,583
360
8
368
48
1,999
1,061
92
-
92
430
1,583
The accompanying notes form an integral part of these annual report and accounts.
35
CONSOLIdATEd
CASh FLOW STATEMENT
for the year ended 31 December 2018
Cash flows from operating activities
Profit after tax
Adjustments for:
Depreciation
Amortisation
Loss on disposal of tangible assets
Share-based payments
Foreign exchange
Interest expense
Tax credit
Changes in working capital:
Increase in inventories
(Increase)/decrease in trade and other receivables
Increase in trade and other payables
Net cash (used)/generated in operations
Tax received – R&D tax credits
Net cash (used)/generated in operating activities
Cash flows from investing activities
Additions to property, plant and equipment
Additions to intangible assets
Proceeds from sale of property, plant and equipment
Net cash used in operating activities
Cash flows from financing activities
Movement in working capital facility
Movement in finance lease liability
Proceeds from share issue
Interest paid
Net cash generated/(used) in financing activities
Net change in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
The accompanying notes form an integral part of these annual report and accounts.
2018
£’000
48
2017
£’000
430
81
16
1
8
(8)
26
(10)
(55)
(1,223)
111
(1,005)
10
(995)
(45)
(3)
-
(48)
454
(2)
360
(26)
78
16
3
-
(5)
48
-
(151)
579
35
1,033
-
1,033
(84)
(1)
10
(75)
(625)
(4)
92
(48)
786
(585)
(257)
631
374
373
258
631
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NOTES TO ThE ANNUAL
REPORT ANd ACCOUNTS
1. General information
Symphony Environmental Technologies plc (‘the
Company’) and subsidiaries (together ‘the Group’) develop
and supply environmental plastic additives and products
to a global market.
Revenue
Plastic additives and finished products, and
associated products
Revenue is stated at the fair value of the consideration
receivable and excludes VAT and trade discounts.
The Company, a public limited company, is the Group’s
ultimate parent company. It is incorporated and domiciled
in England (Company number 03676824). The address
of its registered office is 6 Elstree Gate, Elstree Way,
Borehamwood, Hertfordshire, WD6 1JD, England. The
Company’s shares are listed on the AIM market of the
London Stock Exchange.
2. Basis of preparation and significant
accounting policies
Basis of preparation
These consolidated annual report and accounts have
been prepared in accordance with the requirements of
International Financial Reporting Standards (IFRS) as
adopted by the European Union.
These consolidated annual report and accounts have
been prepared under the historical cost convention
except as stated in the accounting policies. Financial
information is presented in pounds sterling unless
otherwise stated, and amounts are expressed in
thousands (£’000) and rounded accordingly.
Changes to accounting policies during the year are
detailed in ‘Standards and interpretations adopted
during the year’ on page 40.
Consolidation
The consolidated annual report and accounts incorporate
those of Symphony Environmental Technologies plc and all
of its subsidiary undertakings. Subsidiaries acquired during
the year are consolidated using the acquisition method.
Under the acquisition method, their results are incorporated
from the date that control passes. The difference between
the cost of acquisition of shares in subsidiaries and the fair
value of the separable net assets acquired is capitalised as
goodwill. All annual report and accounts are made up to
31 December 2018.
All intra-group transactions, balances and unrealised gains
on transactions between group companies are eliminated
on consolidation. Unrealised losses are also eliminated
unless the transaction provides evidence of an impairment
of the asset transferred. Where necessary, adjustments are
made to the annual report and accounts of subsidiaries to
bring the accounting policies used into line with those used
by other members of the Group.
Going concern
On the basis of current financial projections and available
funds and facilities, the Directors are satisfied that the
Group has adequate resources to continue in operational
existence for the foreseeable future and, accordingly,
continue to adopt the going concern basis in preparing
the Group and Company financial statements.
The Group’s revenue is from the sale of goods. Revenue
from the sale of goods is recognised when all of the
following conditions have been satisfied:
Identification of the contract – Due to the nature of the
goods sold, the Group effectively approves an implied
contract with a customer when it accepts a purchase
order from the customer.
Identification of the separate performance obligations
in the contract – The Group must fulfil the following
obligations, which are agreed on acceptance of the
purchase order:
- To make the goods available for dispatch on the
required date; and
- To organise freight in accordance with agreed INCOTERMs
(a series of pre-defined commercial terms published by
the International Chamber of Commerce).
Determine the transaction price of the contract – The
transaction price is determined as the fair value of the
consideration the Group expects to receive on transfer of
the goods. The price of the sale includes the goods price
and the cost of the transport, if applicable.
Allocation of the transaction price to the performance
obligations identified – Sales prices are agreed with
each customer and are not generally a fixed price per
unit. The transport price will also vary across sales as it is
based on quotes received from the Group’s freight agents,
as transport is charged at cost. Although the Group is
effectively an agent in the provision of transport rather
than the principal under IFRS 15, the transport cost is
insignificant in the context of the overall sale price and
therefore it is not netted out of revenue and cost.
Recognition of revenue when each performance
obligation is satisfied – Provided that the goods have
been made available for dispatch on the required date,
this performance obligation has been fulfilled and the
revenue for this performance obligation is therefore
recognised at this date. In respect to the freight element,
the agreed INCOTERMs need to be satisfied. At this
point, the Group recognises the revenue for this separate
performance obligation.
Intangible assets
Research and development costs
Expenditure on research (or the research phase of an internal
project) is recognised as an expense in the period in which it
is incurred. Development costs incurred on specific projects
are capitalised when all the following conditions are satisfied:
completion of the intangible asset is technically feasible so
that it will be available for use or sale;
the Group intends to complete the intangible asset and
use or sell it;
37
NOTES TO ThE ANNUAL
REPORT ANd ACCOUNTS CONTINUED
the Group has the ability to use or sell the intangible
asset; and
The residual value and useful economic lives are
reconsidered annually.
the intangible asset will generate probable future
economic benefits.
Among other things, this requires that there is a market for
the output from the intangible asset or for the intangible
asset itself, or, if it is to be used internally, the asset will be
used in generating such benefits;
there are adequate technical, financial and other resources
to complete the development and to use or sell the
intangible asset; and
the expenditure attributable to the intangible asset during
its development can be measured reliably.
Development costs not meeting the criteria for capitalisation
are expensed as incurred.
The cost of an internally generated intangible asset
comprises all directly attributable costs necessary to create,
produce, and prepare the asset to be capable of operating
in the manner intended by management. The nature of the
Group’s activities in the field of development work renders
some internally generated intangible assets unable to meet
the above criteria at present.
Amortisation commences upon completion of the asset and
is shown within administrative expenses and is included at
the following rate:
Plastic masterbatches and other additives – 15 years
straight line
Careful judgement by the Directors is applied when
deciding whether the recognition requirements for
development costs have been met. This is necessary as the
economic success of any product development is uncertain
and may be subject to future technical problems at the time
of recognition. Judgements are based on the information
available at each balance sheet date. All amounts disclosed
within note 11 in development costs relate to plastic
masterbatches and other additives.
Trademarks
Trademarks represent the cost of registration and are carried
at cost less amortisation. Amortisation is calculated so as to
write off the cost of an asset, less its estimated residual value,
over the useful economic life of that asset as follows:
Trademarks – 10 years straight line.
Property, plant and equipment
Property, plant and equipment are stated at cost, net of
depreciation and any provision for impairment. The Cost
comprises of the purchase price of the assets plus directly
attributable costs.
Depreciation is calculated so as to write off the cost of
an asset, less its estimated residual value, over the useful
economic life of that asset as follows:
Plant and machinery
Fixtures and fittings
Motor vehicles
Office equipment
20% reducing balance.
10% straight line.
25% reducing balance.
25% straight line.
38
Impairment testing of intangible assets and property,
plant and equipment
All individual assets are tested for impairment whenever
events or changes in circumstances indicate that the
carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which
the asset’s carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of fair value, reflecting
market conditions less costs to sell, and value in use based
on an internal discounted cash flow evaluation. All assets are
subsequently reassessed for indications that an impairment
loss previously recognised may no longer exist.
Inventories
Inventories are valued at the lower of cost and net realisable
value, after making due allowance for obsolete and slow
moving items. Cost is determined on the basis of purchase
value plus all directly attributable costs of bringing the
inventory to the current location and condition, on a first-in
first-out basis.
Leased assets
In accordance with International Accounting Standard (IAS)
17, the economic ownership of a leased asset is transferred
to the lessee if the lessee bears substantially all the risks
and rewards related to the ownership of the leased asset.
The related asset is recognised at the time of inception of
the lease at the fair value of the leased asset or, if lower,
the present value of the minimum lease payments plus
incidental payments, if any, to be borne by the lessee.
A corresponding amount is recognised as a finance
leasing liability. The interest element of leasing payments
represents a constant proportion of the capital balance
outstanding and is charged to statement of comprehensive
income loss over the period of the lease.
All other leases are regarded as operating leases and the
payments made under them are charged to statement
of comprehensive income on a straight line basis over the
lease term. Lease incentives are spread over the term of
the lease.
Employee costs
Employee compensation
Employee benefits are recognised as an expense.
Post employment obligations
The Group operates a defined contribution pension scheme
for employees. The assets of the scheme are held separately
from those of the Group. The pension costs charged against
profits are the contributions payable to the scheme in
respect of the accounting period.
Taxation
Current tax is the tax currently payable based on taxable
profit for the year.
Deferred income taxes are calculated using the liability
method on temporary differences. Deferred tax is generally
provided on the difference between the carrying amounts of
assets and liabilities and their tax bases. Tax losses available
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to be carried forward as well as other income tax credits to
the Group are assessed for recognition as deferred tax assets,
insofar as Group companies are entitled to UK tax credits
on qualifying research and development expenditure, such
amounts are recognised when received and presented in the
income tax line within statement of comprehensive income.
separate provision account with the loss being recognised
within administrative expenses in the consolidated
statement of comprehensive income. On confirmation
that the trade receivable will not be collectable, the
gross carrying value of the asset is written off against the
associated provision.
Deferred tax liabilities are provided in full, with no
discounting. Deferred tax assets are recognised to the extent
that it is probable that the underlying deductible temporary
differences will be able to be offset against future taxable
income. Current and deferred tax assets and liabilities are
calculated at tax rates that are expected to apply to their
respective period of realisation, provided they are enacted or
substantively enacted at the balance sheet date.
Changes in deferred tax assets or liabilities are recognised as
a component of tax expense in profit or loss, except where
they either relate to items that are charged or credited
directly to equity in which case the related deferred tax is
also charged or credited directly to equity, or where they
relate to items charged or credited in other comprehensive
income the deferred tax change is recognised in other
comprehensive income.
Foreign currencies
Monetary assets and liabilities in foreign currencies are
translated into Sterling at the rates of exchange ruling at the
balance sheet date. Transactions in foreign currencies are
translated into Sterling at the rate of exchange ruling at the
date of the transaction. Exchange differences are taken into
account in arriving at the operating result. The Group uses
derivatives such as forward rate agreements to mitigate
its current or future positions against foreign exchange
rate risks. These derivatives are measured at fair value,
determined by reference to observable market prices at the
reporting date.
Financial assets
The Group classifies all of its financial assets as loans and
receivables at amortised cost. Financial assets do not
comprise prepayments. Management determines the
classification of its financial assets at initial recognition.
These assets arise principally from the provision of goods
and services to customers (e.g. trade receivables), but
also incorporate other types of financial assets where
the objective is to hold their assets in order to collect
contractual cash flows and the contractual cash flows are
solely payments of the principal and interest. They are
initially recognised at fair value plus transaction costs that
are directly attributable to their acquisition or issue, and are
subsequently carried at amortised cost using the effective
interest rate method, less provision for impairment.
Impairment provisions are recognised based on the
simplified approach within IFRS 9 using the lifetime
expected credit losses. During this process the probability of
the non-payment of the trade receivables is assessed. This
probability is then multiplied by the amount of the expected
loss arising from default to determine the lifetime expected
credit loss for the trade receivables. For trade receivables,
which are reported net; such provisions are recorded in a
The Group’s financial assets held at amortised cost
comprise trade and other receivables and cash and
cash equivalents in the consolidated statement of
financial position.
The Group has an invoice financing facility whereby it
transfers the rights to the cash flows from the related
receivables to a third party but retains the credit risk by
providing a guarantee. As the Group does not transfer
substantially all the risks and rewards of the receivables,
no derecognition of financial assets is required.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and other
short-term, highly liquid deposits that are readily convertible
into known amounts of cash and which are subject to an
insignificant risk of changes in value.
Financial liabilities
The Group classifies its financial liabilities in the category of
financial liabilities at amortised cost. All financial liabilities
are recognised in the statement of financial position when
the Group becomes a party to the contractual provision of
the instrument.
Financial liabilities measured at amortised cost include:
Trade payables and other short-dated monetary liabilities,
which are initially recognised at fair value and subsequently
carried at amortised cost using the effective interest rate
method.
Bank and other borrowings are initially recognised at fair
value net of any transaction costs directly attributable
to the issue of the instrument. Such interest-bearing
liabilities are subsequently measured at amortised cost
using the effective interest rate method, which ensures
that any interest expense over the period to repayment is
at a constant rate on the balance of the liability carried in
the consolidated statement of financial position. For the
purposes of each financial liability, interest expense includes
initial transaction costs and any premium payable on
redemption, as well as any interest or coupon payable while
the liability is outstanding.
Unless otherwise indicated, the carrying values of the Group’s
financial liabilities measured at amortised cost represents a
reasonable approximation of their fair values.
Equity settled share-based payments
All share-based payment arrangements granted after
7 November 2002 that had not vested prior to 1 January
2007 are recognised in the annual report and accounts.
All goods and services received in exchange for the grant
of any share-based payment are measured at their fair
values. Where employees are rewarded using share-based
payments, the fair values of the instrument granted are
determined using the Black-Scholes model.
39
NOTES TO ThE ANNUAL
REPORT ANd ACCOUNTS CONTINUED
This fair value is appraised at the grant date. The fair value is
charged to statement of comprehensive income between
the date of issue and the date the share options vest with
a corresponding credit taken to equity.
Equity
Equity comprises the following:
“Share capital” represents the nominal value of equity
shares;
“Share premium” represents the excess over nominal
value of the fair value of consideration received for equity
shares, net of expenses of the share issue and after capital
reduction; and
“Retained earnings” represents non-distributed reserves.
Standards and interpretations adopted during the year
The adoption of the following mentioned amendments
in the current year have not had a material impact on the
Group’s/Company’s financial statements:
EU effective date –
periods beginning
on or after
1 January 2018
IFRS 2 Share-based Payment:
Amendment in relation to the
classification and measurement of
share-based payment transactions
At the date of authorisation of these annual report and
accounts, certain new standards, amendments and
interpretations to existing standards became effective,as
they had not been previously adopted by the Group.
Information on new standards, amendments and
interpretations that are relevant to the Group’s annual
report and accounts is provided below. Certain other new
standards and interpretations have been issued but are not
expected to have a material impact on the Group’s annual
report and accounts.
IFRS 9 ‘Financial instruments’
In the current year, the Group has applied IFRS 9 Financial
Instruments (as revised in July 2014) and the related
consequential amendments to other IFRS Standards that are
effective for an annual period that begins on or after 1 January
2018. The IASB have released IFRS 9 following completion
of the project to replace IAS 39 ‘Financial Instruments:
Recognition and Measurement’. The new standard introduces
extensive changes to IAS 39’s guidance on the classification
and measurement of financial assets and introduces a new
‘expected credit loss’ model for the impairment of financial
assets. IFRS 9 also provides new guidance on the application
of hedge accounting. IFRS 9 is effective for annual reporting
periods beginning on or after 1 January 2018 and has been
endorsed by the European Union. The Group’s management
have performed an impact assessment of the effects of IFRS
9 on the 2018 figures and there are not any material changes
to the Group’s annual report and accounts.
40
IFRS 15, “Revenue from Contracts with Customers”
In the current year, the Group has applied IFRS 15 Revenue
from Contracts with Customers (as amended in April 2016)
which is effective for an annual period that begins on or
after 1 January 2018. IFRS 15 presents new requirements
for the recognition of revenue, replacing IAS 18 ‘Revenue’,
IAS 11 ‘Construction Contracts’, and several revenue-related
Interpretations. The new standard establishes a control-
based revenue recognition model and provides additional
guidance in many areas not covered in detail under
existing IFRSs, including how to account for arrangements
with multiple performance obligations, variable pricing,
customer refund rights, supplier repurchase options,
and other common complexities. IFRS 15 is effective
for reporting periods beginning on or after 1 January
2018. This standard has been endorsed by the European
Union. The Group’s management have performed an
impact assessment of the effects of IFRS 15 on the 2018
figures and there are not any change to the statement
of comprehensive income as presented. The revenue
recognition of the Group will remain unchanged as all
performance obligations under IFRS15 are met at the same
time as per the current revenue recognition policy as set
out above.
New and revised IFRS Standards in issue but not
yet effective
At the date of authorisation of these financial statements,
The Group has not applied the following new and
revised IFRS Standards that have been issued but are
not yet effective.
IFRS 16 ‘Leases’
The IASB has published IFRS 16 ‘Leases’, completing its long-
running project on lease accounting. The new Standard,
which is effective for accounting periods beginning on or
after 1 January 2019, requires lessees to account for leases
‘on-balance sheet’ by recognising a ‘right-of-use’ asset and a
lease liability. The date of initial application of IFRS 16 for the
Group will be 1 January 2019. It will affect most companies
that report under IFRS and are involved in leasing, and
will have a substantial impact on the annual report and
accounts of lessees of property and high value equipment.
This standard has been endorsed by the European Union.
The Group’s management has carried out an impact
review of the implementation of IFRS 16 and has decided
it will apply the modified retrospective adoption method
in IFRS 16, and, therefore, will only recognise leases on
the balance sheet as at 1 January 2019. In addition, it has
decided to measure right-of-use assets by reference to the
measurement of the lease liability on that date. This will
ensure there is no immediate impact to net assets on
that date.
At 31 December 2018 operating lease commitments
amounted to £860,000 (see note 19), which is expected
to reduce to £711,000 at 31 December 2019. Assuming the
Group’s lease commitments remain at this level, the effect
of discounting those commitments is anticipated to result
in right-of-use assets and lease liabilities of approximately
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£745,000 being recognised on 1 January 2019. However,
further work still needs to be carried out to determine
whether and when extension and termination options are
likely to be exercised, which will result in the actual liability
recognised being higher than this.
Recoverability of capitalised development cost
Estimates and related judgements in respect to capitalised
development costs are detailed in note 11. In particular,
estimates are continued to be made in respect to future
economic benefits and any changes to market conditions.
Instead of recognising an operating expense for its
operating lease payments, the group will instead recognise
interest on its lease liabilities and amortisation on its right-of-
use assets. This will increase reported EBITDA by the amount
of its current operating lease cost, which for the year ended
31 December 2018 was approximately £126,000.
IFRIC 23 ‘Uncertainty over Income Tax Positions’
IFRIC 23 clarifies how to recognise and measure current
and deferred income tax assets and liabilities when there
is uncertainty over income tax treatments. When there is
uncertainty over income tax treatments.
Other
The Group does not expect any other standards issued by
the IASB, but not yet effective, to have a material impact on
the group.
The following is a list of other new and amended
standards which, at the time of writing, had been issued
by the IASB but which are effective in future periods. The
amount of quantitative and qualitative detail to be given
about each of the standards will, much like the amount of
detail to be given about IFRS 16, depend on each entity’s
own circumstances.
Amendments to IFRS 9 Prepayment Features with
Negative Compensation (effective 1 January 2019)
Amendments to IAS 28: Long-term Interests in Associates
and Joint Ventures (effective 1 January 2019)
Annual Improvements to IFRSs 2015-2017 Cycle (IFRS 3
Business Combinations and IFRS joint Arrangements,
IAS 12 Income Taxes, and IAS 23 Borrowing Costs) (effective
1 January 2019)
IFRS 17 Insurance Contracts (effective 1 January 2021)
3. Significant accounting estimates and judgements
Estimates and judgements are evaluated continually
and are based on historical experience and other factors,
including expectations of future events that are believed
to be reasonable under the circumstances. Although these
estimates are based on management’s best knowledge of
current events and actions, actual results may ultimately
differ from those actions. Material changes to the estimates
and judgements made in the preparation of the interim
statements are detailed in the notes.
In preparing these accounts the following areas were
considered to involve significant estimates:
Capitalisation of development cost
Estimates and related judgements in respect to the
capitalisation of development costs are detailed in note
2. In particular, estimates are made in respect to future
economic benefits based on market judgements at the
time and over attributable internal staff time allocated to
each product.
Share option judgements
Estimates and related judgements in respect to share-
based payment charges are detailed in note 2. Estimates
are made on the fair value of the option using the Black-
Scholes model.
Going concern
Estimates and related judgements in respect to going
concern are detailed in note 2. In particular, estimates are
made as to future revenues expectations which derive
cash flow projections.
Expected credit losses (ECLs)
Expected credit losses are shown in note 14. ECLs
are determined based on historical data available to
management in addition to forward looking information
utilising management knowledge. Adequate information
exists to support the recoverability of the net receivables
balance.
Functional currency
A significant proportion of the revenues generated by
entities within the group are denominated in United States
Dollars (USD). The functional currency of the Company
and of all individual entities within the Group has been
determined to be Sterling. Identification of functional
currencies requires a judgement as to the currency of the
primary economic environment in which the companies of
the Group operate. This is based on analysis of the economic
environment and cash flows of the subsidiaries of the Group,
which has determined, based upon the currency of funding
and operating costs, that the functional currency continues
to be Sterling.
In preparing these accounts the following areas were
considered to involve significant judgements:
Recognition of deferred tax assets
Judgements and estimates relating to a deferred tax asset
are detailed in note 2. In particular, estimates are made as
to future revenues which derive profit and loss projections.
However, management does not consider it appropriate to
recognise a deferred tax asset where there is uncertainty
over the amount of future profits.
41
NOTES TO ThE ANNUAL
REPORT ANd ACCOUNTS CONTINUED
4. Segmental information
The Board has reviewed the requirements of IFRS 8 “Operating Segments”, including consideration of what results and
information the Board reviews regularly to assess performance and allocate resources, and concluded that all revenue falls
under a single business segment. The Directors consider the business does not have separate divisional segments as defined
under IFRS 8. The Board assesses the commercial performance of the business based upon a single set of revenues, margins,
operating costs and assets.
The revenues of the Group are divided in the following geographical areas:
Geographical area
UK
Europe
Americas
Middle East and Africa
Asia
Total
2018
£’000
Revenue
417
1,281
3,414
2,472
1,218
8,802
2017
£’000
Revenue
288
784
3,263
3,002
930
8,267
Revenues attributable to the above geographical areas are made on the basis of final destination of the customer to which
the goods are sold.
Non-current assets of £20,000 are held outside of the UK (2017: £25,000).
Major customers
There was one customer that accounted for greater than 10% of total Group revenues for 2018 (2017: one customer). In 2018 one
customer accounted for £2,235,000 or 25% (2017: £2,861,000 or 35%) of total group revenues.
5. Operating profit
The operating profit is stated after charging:
Depreciation
Amortisation
Loss on disposal of property, plant and equipment
Research and development expenditure not capitalised
Operating lease rentals:
• Land and buildings
• Plant and equipment
Fees payable to the Company’s auditor:
Audit related services:
• Audit of the annual report and accounts
• Audit of the annual report and accounts of the Company’s subsidiaries
Non-audit related services:
• Other assurance related services
• Tax compliance services
Net foreign exchange loss
2018
£’000
81
16
1
664
114
12
11
15
11
9
30
2017
£’000
78
16
3
625
114
6
11
15
-
8
22
42
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6. Directors and employees
Staff costs (including directors) during the year comprise:
Wages and salaries
Social security costs
Share-based payments
Other pension costs
Average monthly number of people (including directors) by activity:
R&D, testing and technical
Selling
Administration
Management
Marketing
Total average headcount
Remuneration in respect of the Directors was as follows:
Emoluments
Key management remuneration:
Short-term employee benefits
Share-based payments
2018
£’000
1,530
210
8
65
1,813
2017
£’000
1,382
167
-
53
1,602
2018
2017
9
6
10
7
2
34
2018
£’000
577
577
2018
£’000
569
8
577
7
6
9
6
1
29
2017
£’000
551
551
2017
£’000
551
-
551
The Directors are considered to be the key management personnel of the Group. Further details on Directors’ remuneration
and share options are set out in the Remuneration Committee Report.
7. Finance costs
Interest expense:
• Bank and invoice finance borrowings
Total finance costs
Net finance costs
2018
£’000
2017
£’000
26
26
26
48
48
48
43
NOTES TO ThE ANNUAL
REPORT ANd ACCOUNTS CONTINUED
8. Taxation
R&D tax credit
Total income tax credit
No tax arises on the profit for the year.
2018
£’000
10
10
The tax assessed for the year is different from the standard rate of corporation tax in the UK of 19% (2017: 19%).
The differences are explained as follows:
Profit for the year before tax
Tax calculated by rate of tax on the result
Effective rate for year at 19% (2017: 19.25%)
Expenses not deductible for tax purposes
Fixed asset related timing differences
R&D tax relief
Share scheme deduction
Short term timing differences
Losses carried forward
R&D tax credit not yet recognised
R&D tax credit in respect of previous periods
Total income tax credit
2018
£’000
38
7
13
3
(58)
(6)
3
1
37
(10)
(10)
2017
£’000
-
-
2017
£’000
430
83
8
(7)
(70)
(16)
2
-
-
-
-
Symphony Environmental Limited continues to undertake research and development work which results in a research
and development tax credit being made repayable to the company by HMRC in exchange for tax losses surrendered by
the company at a tax rate of 14.5%. As in prior years, the group has chosen to recognise such cash tax credits in its financial
statements, once the relevant research and development claim has been accepted and repaid by HMRC. Usually this is shortly
after the submission of the company’s tax return. The cash tax credit of £10,000 shown above relates to repayments made by
HMRC in relation to the years ended 31 December 2016 and 31 December 2017.
In calculating the overall tax charge for the Group for the period, Symphony Environmental Limited has provisionally included
a portion of the anticipated research and development claim for year ended 31 December 2018 to increase the trading losses
made available for surrender to Symphony Environmental Technologies Plc as group relief. In doing so, the overall current
year tax charge for the Group for the period has been reduced to £nil. Symphony Environmental Limited intends to surrender
any remaining trading losses, not claimed as group relief, in exchange for a cash tax credit. The Group expects to be able to
recognise this cash tax credit within next year’s financial statements once this is repaid.
The recognition of the deferred tax asset is based on sensitising management forecasts to estimate the future taxable profits
against which the losses will be relieved. Judgements have been made in respect to profitability going forward based upon
current sales leads and market receptiveness to anticipated product launches.
The Group has not recognised a deferred tax asset in respect of losses available for use against future taxable profits due to
uncertainties on timing. The Group has tax losses of approximately £16,152,000 (2017: £16,000,000). These tax losses have no
expiry date. The unrecognised deferred tax asset in respect of these losses based on latest profit projections is approximately
£2,745,000 (2017: £2,730,000).
These brought forward losses are subject to the new loss restriction rules introduced on 1 April 2017. Groups with more
than £5m taxable profits per annum will only be able to utilise 50% of their brought forward losses against taxable profits
exceeding the £5m cap. As Symphony does not expect its taxable profits to exceed £5m in the near to immediate term, it is
not possible to quantify the impact of these changes at this moment in time.
The main rate of corporation tax was reduced from 20% to 19% from 1 April 2017, and remains unchanged. A further reduction
in the UK corporation tax rate was substantively enacted on 6 September 2016 reducing the headline corporation tax rate
from 18% to 17% applicable from 1 April 2020.
44
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The group also has gross fixed assets of £104,000 (2017: £120,000) which give rise to a deferred tax liability of £18,000
(2017: £20,000).Other gross temporary timing differences of £37,000 (2017: £19,000) give rise to a deferred tax asset of
£6,000 (2017: £3,000). The net deferred tax liability of £11,000 (2017: £17,000) is sheltered by the unrecognised deferred
tax asset in respect of losses.
9. Earnings per share and dividends
The calculation of basic earnings per share is based on the profit attributable to ordinary shareholders divided by the weighted
average number of shares in issue during the year. The calculation of diluted earnings per share is based on the basic earnings
per share, adjusted to allow for the issue of shares on the assumed conversion of all dilutive options and warrants.
Reconciliations of the profit and weighted average numbers of shares used in the calculations are set out below:
Basic and diluted
Profit attributable to equity holders of the Company
Weighted average number of ordinary shares in issue
Basic earnings per share
Dilutive effect of weighted average options and warrants
Total of weighted average shares together with dilutive effect of
weighted options
Diluted earnings per share
2018
2017
£48,000
£430,000
152,877,898
151,089,240
0.03 pence
0.28 pence
9,585,716
9,925,427
162,463,614
161,014,667
0.03 pence
0.27 pence
No dividends were paid for the year ended 31 December 2018 (2017: £nil).
A total of 14,351,500 options and warrants were outstanding at the end of the year which may become dilutive in future years.
45
NOTES TO ThE ANNUAL
REPORT ANd ACCOUNTS CONTINUED
10. Property, plant and equipment
year ended 31 December 2018
Cost
At 1 January 2018
Additions
Disposals
At 31 December 2018
Depreciation
At 1 January 2018
Charge for the Year
Disposals
At 31 December 2018
Net Book Value
At 31 December 2018
At 31 December 2017
Plant &
machinery
£’000
Fixtures
& Fittings
£’000
motor
Vehicles
£’000
Office
Equipment
£’000
Total
£’000
417
19
(6)
430
256
35
(6)
285
145
161
291
5
-
296
194
29
-
223
73
97
31
-
-
31
22
2
-
24
7
9
104
21
(34)
91
80
15
(33)
62
29
24
843
45
(40)
848
552
81
(39)
594
254
291
Included within net book value of motor vehicles is £nil (2017: £7,000) relating to assets held under finance leases and
hire purchase contracts. The depreciation charged to the annual report and accounts in the year in respect of such assets
amounted to £1,000 (2017: £3,000), and is included within administrative expenses in the statement of comprehensive income.
Plant &
machinery
£’000
Fixtures
& Fittings
£’000
motor
Vehicles
£’000
Office
Equipment
£’000
Total
£’000
364
68
(15)
417
233
29
(6)
256
161
131
292
2
(3)
291
167
30
(3)
194
97
125
61
-
(30)
31
46
2
(26)
22
9
15
125
15
(36)
104
98
17
(35)
80
24
27
842
85
(84)
843
544
78
(70)
552
291
298
year ended 31 December 2017
Cost
At 1 January 2017
Additions
Disposals
At 31 December 2017
Depreciation
At 1 January 2017
Charge for the Year
Disposals
At 31 December 2017
Net Book Value
At 31 December 2017
At 31 December 2016
46
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U
S
N
E
S
S
R
E
V
E
W
I
C
O
R
P
O
R
A
T
E
G
O
V
E
R
N
A
N
C
E
I
I
F
N
A
N
C
A
L
S
T
A
T
E
M
E
N
T
S
11. Intangible assets
year ended 31 December 2018
Cost
At 1 January 2018
Additions
Disposals
At 31 December 2018
Amortisation
At 1 January 2018
Charge for the Year
Disposals
At 31 December 2018
Impairment
At 1 January 2018
At 31 December 2018
Net Book Value
At 31 December 2018
At 31 December 2017
Development
costs
£’000
Trademarks
£’000
1,973
-
-
1,973
211
11
-
222
1,728
1,728
23
34
85
3
(12)
76
27
5
(12)
20
45
45
11
13
Total
£’000
2,058
3
(12)
2,049
238
16
(12)
242
1,773
1,773
34
47
Development costs are capitalised in accordance with the policy set out in note 2. In capitalising these costs, judgements
are made relating to ongoing feasibility and commerciality of products and systems being developed. In making these
judgements, cash flow forecasts are used and these include significant estimates in respect to sales forecasts and
future foreign exchange rates. The amortisation charge is included within administrative expenses in the statement of
comprehensive income. Development costs include in the net book value of £23,000 (2017: £34,000) have two years of
amortisation remaining as at 31 December 2018 (2017: three years).
year ended 31 December 2017
Cost
At 1 January 2017
Additions
At 31 December 2017
Amortisation
At 1 January 2017
Charge for the Year
At 31 December 2017
Impairment
At 1 January 2017
At 31 December 2017
Net Book Value
At 31 December 2017
At 31 December 2016
Development
costs
£’000
Trademarks
£’000
1,973
-
1,973
201
10
211
1,728
1,728
34
44
84
1
85
21
6
27
45
45
13
18
Total
£’000
2,057
1
2,058
222
16
238
1,773
1,773
47
62
47
NOTES TO ThE ANNUAL
REPORT ANd ACCOUNTS CONTINUED
12. Subsidiary undertakings
Name
Country of incorporation
Nature of business
Symphony Environmental Limited
England and Wales
Development
and supply of
environmental
plastic additives
and products
Proportion of
ordinary shares
held by parent
Proportion of
ordinary shares
held by the
Group
100%
100%
D2W Limited
Symphony Recycling
Technologies Limited
England and Wales
Dormant
England and Wales
Dormant
0%
100%
100%
100%
Symphony Energy Limited
England and Wales
Dormant
100%
100%
All of the above subsidiaries are consolidated in the Group annual report and accounts. The above companies have their
registered offices at 6 Elstree Gate, Elstree Way, Borehamwood, WD6 1JD.
13. Inventories
Finished goods and goods for resale
Raw materials
2018
£’000
372
251
623
2017
£’000
438
129
567
The cost of inventories recognised as an expense and included in ‘cost of sales’ amounted to £3,997,000
(2017: £3,819,000). There is a provision of £7,500 for the impairment of inventories (2017: £73,000).
There is no collateral on the above amounts.
48
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S
S
R
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V
E
W
I
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O
R
P
O
R
A
T
E
G
O
V
E
R
N
A
N
C
E
I
I
F
N
A
N
C
A
L
S
T
A
T
E
M
E
N
T
S
14. Trade and other receivables
Trade receivables
Other receivables
VAT
Prepayments
2018
£’000
1,978
38
58
154
2,228
2017
£’000
739
53
58
142
992
The Directors consider that the carrying value of trade and other receivables approximates to their fair values.
Symphony Environmental Technologies plc applies the IFRS 9 simplified approach to measuring expected credit losses (
ECL) which uses a lifetime expected loss allowance for all trade receivables. The ECL balance has been determined based
on historical data available to management in addition to forward looking information utilising management knowledge.
Based on the analyses performed, management expect that all balances will be recovered, thus there is no material impact
on the transition to ECL.
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business.
They are generally due for settlement within 120 days and therefore are all classified as current. The majority of trade and other
receivables are non-interest bearing. Where the effect is material, trade and other receivables are discounted using discount
rates which reflect the relevant costs of financing.
The maximum credit risk exposure at the balance sheet date equates to the carrying value of trade receivables. Further
disclosures are set out in note 22.
Trade receivables are secured against the facilities provided by the Group’s bankers.
Included in trade receivables are debtors which are past due but where no provision has been made as there has not been
a change in the credit worthiness of these debtors and the amounts are considered recoverable. The ageing analysis of debt
taking into account credit terms is shown below.
Days past due
31 December 2018
31 December 2017
0 - 30
£’000
1,871
625
31-60
£’000
66
85
61-90
£’000
39
17
91-120
£’000
>120
£’000
Total Gross
£’000
ECL
£’000
Total Net
£’000
-
2
27
33
2,003
762
(25)
(23)
1,978
739
15. Cash and cash equivalents
Cash at bank and in hand
Invoice finance facility surplus
The carrying amount of cash equivalents approximates to their fair values.
2018
£’000
374
-
374
2017
£’000
576
55
631
49
NOTES TO ThE ANNUAL
REPORT ANd ACCOUNTS CONTINUED
16. Equity
At 1 January 2018
Issue of share capital
Share-based payment
Profit for the year
At 31 December 2018
At 1 January 2017
Issue of share capital
Capital reduction
Profit for the year
At 31 December 2017
Group and Company
Group
Ordinary shares
Number
Ordinary
shares
£’000
Share
premium
£’000
Retained
earnings
£’000
151,614,377
2,730,000
-
-
154,344,377
149,939,377
1,675,000
-
-
151,614,377
1,516
27
-
-
1,543
1,499
17
-
-
1,516
-
333
-
-
333
3,533
75
(3,608)
-
-
67
-
8
48
123
(3,971)
-
3,608
430
67
Total
£’000
1,583
360
8
48
1,999
1,061
92
-
430
1,583
During the year the Company issued 2,730,000 Ordinary Shares (2017: 1,675,000 ordinary shares) for a consideration of
£360,000 (2017: £92,000).
Share options and warrants
As at 31 December 2018 the Group maintained an approved share-based payment scheme for employee compensation.
For the options granted to vest, the Group must have achieved an earnings per share in excess of 0.001p and employees
must serve a specified amount of time.
All share-based employee compensation will be settled in equity. The Group has no legal or constructive obligation to
repurchase or settle the options. As at 31 December 2018 there were 1,450,000 approved staff options outstanding.
No approved staff options were issued in 2018.
The Group has also issued unapproved share options and warrants. The weighted average exercise price of all of the Group’s
options and warrants are as follows:
Outstanding at 1 January
Granted
Exercised
Lapsed
Number
15,781,500
1,850,000
(2,730,000)
(550,000)
Outstanding at 31 December
14,351,500
2018 Weighted average
exercise price
£
0.07
0.16
0.13
0.05
0.07
Number
24,456,500
-
(1,675,000)
(7,000,000)
15,781,500
2017 Weighted average
exercise price
£
0.09
-
0.05
0.15
0.07
The weighted average exercise price of options exercised in 2018 was 13p (2017: 5p).
The number of share options and warrants exercisable at 31 December 2018 was 14,351,500 (2017: 15,781,500). The weighted
average exercise price of those shares exercisable was 7p (2017: 7p).
The weighted average option contractual life is seven years (2017: eight years) and the range of exercise prices is 2.375p to 25p
(2017: 2.375p to 15p).
Directors
Directors’ interests in shares and share incentives are contained in the Remuneration Committee Report on pages 28-29.
IFRS2 expense
The IFRS 2 share-based payment charge for the year is £8,000 (2017: £nil).
50
The Black-Scholes model was used for calculating the cost of staff options. The model inputs for each of the options
issued were:
Grant date
Share price at grant date
Exercise price
Expected volatility
Contractual life
6 April 2018
20.25p
20.25p
12.49%
3 years
Share prices at grant date were based on the observable market price of the Group’s share price, using the closing market
price of the Group’s share price the day before the options were granted.
17. Borrowings
Current
Other loans
Finance lease liabilities
2018
£’000
454
-
454
2017
£’000
-
2
2
Other loans include:
An amount due relating to the invoice financing facility totalling £454,000 (2017: £nil). Interest is charged at 2.20% over
HSBC Bank plc base rate per annum. At 31 December 2017 the invoice finance facility was showing a surplus so is included
within cash and cash equivalents.
The bank and invoice finance facility are secured by a fixed and floating charge over the Group’s assets. The finance lease
liabilities are secured against the asset that they finance.
Commitments under finance leases and hire purchase agreements mature as follows showing both gross and net of
finance costs:
Amounts payable within one year
Reconciliation of liabilities arising from financing activities
Gross 2018
£’000
Gross 2017
£’000
Net 2018
£’000
Net 2017
£’000
-
-
2
2
–
-
2
2
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U
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N
E
S
S
R
E
V
E
W
I
C
O
R
P
O
R
A
T
E
G
O
V
E
R
N
A
N
C
E
I
I
F
N
A
N
C
A
L
S
T
A
T
E
M
E
N
T
S
1 January 2018
£’000
Cash flows
£’000
Non-cash
changes
£’000
31 December 2018
£’000
For the year ended 31 December 2018
Working capital facility
Movement in finance lease liability
Issue of shares
Total liabilities from financing activities
-
2
1,516
1,518
454
(2)
360
812
For the year ended 31 December 2017
Working capital facility
Movement in finance lease liability
Issue of shares
Total liabilities from financing activities
1 January 2017
£’000
Cash flows
£’000
625
6
5,032
5,663
(625)
(4)
92
(537)
-
-
-
-
Non-cash
changes
£’000
-
-
(3,608)
(3,608)
454
-
1,876
2,330
31 December 2017
£’000
-
2
1,516
1,518
51
NOTES TO ThE ANNUAL
REPORT ANd ACCOUNTS CONTINUED
18. Trade and other payables
Current
Financial liabilities measured at amortised cost:
Trade payables
Other payables
Social security and other taxes
Accruals
2018
£’000
906
5
58
91
1,060
Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The
average credit period taken for trade purchases is 64 days (2017: 62 days). The Group has financial risk management
policies in place to ensure that all payables are paid within the pre-agreed credit terms.
The Directors consider that the carrying value of trade and other payables approximate to their fair value.
19. Commitments and contingencies
a) Capital commitments
The Group had capital commitments totalling £nil at the end of the year (2017: £nil).
b) Operating lease commitments
The future aggregate minimum lease payments under non-cancellable operating leases are as follows:
No later than one year
Later than one year and no later than five years
Greater than five years
2018
£’000
149
579
132
860
2017
£’000
730
5
48
160
943
2017
£’000
137
543
264
944
Operating lease commitments include the lease for the Group’s head office property which has a ten-year term with
a five-year break clause at the option of the Group. The financial obligations are calculated up to the expiry of the lease.
c) Contingent liabilities
The Group had contingent liabilities totalling of £nil at the end of the year (2017: £nil).
20. Related party transactions
Included in other receivables is an amount of £1,000 (2017: other payables £2,000) owed by The Oxo–Biodegradable Plastics
Association, a not for profit company limited by guarantee, in which Symphony Environmental Technologies plc is a person
of significant control. The amount of £1,000 (2017: £nil) is unsecured and settlement will be in cash.
52
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I
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O
R
P
O
R
A
T
E
G
O
V
E
R
N
A
N
C
E
I
I
F
N
A
N
C
A
L
S
T
A
T
E
M
E
N
T
S
21. Financial Instruments – classification and measurement
The Group’s financial assets and liabilities, which are all held at amortised cost, are summarised as follows:
Financial assets:
Trade receivables
Other receivables
Cash and cash equivalents
Financial liabilities:
Trade payables
Other payables
Accruals
Other loans
Lease obligations
2018
£’000
1,978
38
374
2,390
2018
£’000
906
5
91
454
-
1,456
2017
£’000
739
53
631
1,423
2017
£’000
730
5
160
-
2
897
53
NOTES TO ThE ANNUAL
REPORT ANd ACCOUNTS CONTINUED
22. Financial instruments - risk managements
The main risks arising from the Group’s financial instruments are liquidity risk, interest rate risk, currency risk and credit risk.
The Directors review and agree policies for managing each of these risks and they are summarised below. These policies have
remained unchanged from previous years.
Liquidity risk
The Group seeks to manage financial risk to ensure financial liquidity is available to meet foreseeable needs and to invest cash
assets safely and profitability. Short term flexibility is achieved through trade finance arrangements and overdrafts.
Having reviewed the maturity of financial liabilities and the forecast cash flows for the forthcoming twelve month period, the
Directors believe that sufficient cash will be generated from trading operations to meet debt obligations as they fall due.
The maturity of financial liabilities as at 31 December 2018 is summarised as follows:
Gross cash flows:
Zero to sixty days
Sixty one days to three months
Four months to six months
Seven months to one year
One year to three years
Trade
payables
and
accruals
£’000
1,002
-
-
-
-
1,002
The maturity of financial liabilities as at 31 December 2017 is summarised as follows:
Gross cash flows:
Zero to sixty days
Sixty one days to three months
Four months to six months
Seven months to one year
One year to three years
Trade
payables
and
accruals
£’000
895
-
-
-
-
895
Finance
leases
£’000
-
–
-
–
–
–
Loans
£’000
454
–
–
–
–
454
Finance
leases
£’000
Loans
£’000
1
-
1
-
-
2
–
–
–
–
–
–
Total
£’000
1,456
-
-
-
-
1,456
Total
£’000
896
-
1
-
-
897
54
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U
S
N
E
S
S
R
E
V
E
W
I
C
O
R
P
O
R
A
T
E
G
O
V
E
R
N
A
N
C
E
I
I
F
N
A
N
C
A
L
S
T
A
T
E
M
E
N
T
S
Interest rate risk
The Group seeks to reduce its exposure to interest rate risk where possible, but this is offset by the availability of trade finance
arrangements which are transaction specific to meet liquidity needs and so have variable interest rate terms.
Sensitivities have been looked at in the range of an absolute rate increase of 5% or a decrease of 1% which enable an objective
calculation to be made depending on any interest rate changes in the future. Any rate changes would be outside the control
of the Group.
The Group’s exposure to interest rate risk as at 31 December 2018 is summarised as follows:
Cash and cash equivalents
Trade receivables
Other debtors
Trade payables
Other payables
Other loans
Sensitivity: increase in interest rates of 5%
Sensitivity: decrease in interest rates of 1%
Fixed
£’000
Variable
£’000
-
-
-
-
-
-
-
-
374
-
-
374
-
-
(454)
(80)
(4)
1
The Group’s exposure to interest rate risk as at 31 December 2017 is summarised as follows:
Cash and cash equivalents
Trade receivables
Other debtors
Trade payables
Other payables
Lease purchase
Sensitivity: increase in interest rates of 5%
Sensitivity: decrease in interest rates of 1%
Fixed
£’000
Variable
£’000
-
-
-
-
-
-
(2)
(2)
-
-
631
-
-
631
-
-
-
631
32
(6)
Sensitivity shows the effect on equity and statement of comprehensive income.
Zero
£’000
-
1,978
38
2,016
(906)
(5)
-
1,105
Zero
£’000
-
739
53
792
(730)
(5)
-
57
-
-
Total
£’000
374
1,978
38
2,390
(906)
(5)
(454)
1,025
(4)
1
Total
£’000
631
739
53
1,423
(730)
(5)
(2)
686
32
(6)
55
NOTES TO ThE ANNUAL
REPORT ANd ACCOUNTS CONTINUED
Currency risk
The Group operates in overseas markets and is subject to currency exposure on transactions undertaken during the year.
The Group hedges the transactions where possible by buying goods and selling them in the same currency. The Group also
has bank facilities available for hedging purposes.
A summary of foreign currency financial assets and liabilities as stated in the statement of financial position together with
a sensitivity analysis showing the effect of a 10% change in rate with Sterling is shown below:
Financial assets
Financial liabilities
Net balance
Effect of 10% Sterling increase
Effect of 10% Sterling decrease
Financial assets
Financial liabilities
Net balance
Effect of 10% Sterling increase
Effect of 10% Sterling decrease
Currency
Euro
Euro
Euro
USD
USD
USD
Currency
balance
2018
’000
€557
€(241)
€316
$2,238
$(1,134)
$1,104
Sterling
balance
2018
£’000
500
(216)
284
(26)
32
1,754
(888)
866
(79)
96
Currency
balance
2017
’000
€149
€(163)
€(14)
$1,612
$(536)
$1,076
Sterling
balance
2017
£’000
132
(145)
(13)
1
(1)
1,194
(397)
797
(72)
89
Sensitivity shows the effect on equity and statement of comprehensive income. A 10% change is shown to enable an objective
calculation to be made on exchange rates which may be assumed for the future.
As at 31 December 2018 the Group had no outstanding forward foreign currency contacts (2017: the Group had outstanding
forward contracts which all matured within 1 month of the year end and committed the Group to selling US Dollars 530,000
and to receive a fixed Sterling amount).
The forward currency contracts are measured at fair value, which is determined using the valuation techniques that utilise
observable inputs. The key inputs used in valuing the derivatives are the forward exchange rates for USD:GBP. The fair value
of the forward-foreign currency contracts at 31 December 2018 is £nil (2017: profit £16,000).
Credit risk
The Group’s exposure to credit risk is limited to the carrying value of financial assets at the balance sheet date, summarised
as follows:
Loans and receivables:
Trade receivables
Other debtors
Cash and cash equivalents
2018
£’000
1,978
38
374
2,390
2017
£’000
739
53
631
1,423
The credit risk associated with the cash is limited as the counterparties have high credit ratings assigned by international
credit-rating agencies. The principal credit risk arises therefore from trade receivables. The seven largest customer balances
at the end of the year make up 58% (2017: 65%) of the above trade receivables.
In order to manage credit risk the Directors set limits for customers based on a combination of payment history, third party
credit references and use of credit insurance. These limits are reviewed regularly.
The maturity of overdue debts and details of impairments and amounts written off are set out in note 14.
56
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S
R
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V
E
W
I
C
O
R
P
O
R
A
T
E
G
O
V
E
R
N
A
N
C
E
I
I
F
N
A
N
C
A
L
S
T
A
T
E
M
E
N
T
S
Capital requirements and management
Interest bearing loans and borrowings are monitored regularly to ensure the Group has sufficient liquidity and its exposure
to interest rate risk is mitigated. Management consider the capital of the Group comprises the share capital as detailed in
note 16 and interest bearing loans and borrowings as detailed in note 17. The Company satisfies the Companies Act 2006
requirement to hold £50,000 issued and authorised share capital. The rule that 25% must be paid up is also satisfied, by
reference to note 16
The Group’s capital management objectives are:
to ensure the Group’s ability to continue as a going concern; and
to provide an adequate return to shareholders
The Group monitors capital on the basis of the gearing ratio calculated as net debt divided by total capital. Net debt is
calculated as total borrowings as shown in the consolidated statement of financial position less cash and cash equivalents.
Total capital is calculated as equity as shown in the consolidated statement of financial position plus net debt.
The Group’s goal in capital management is to maintain an optimal gearing ratio (the ratio of net debt over debt plus equity).
The Group manages the capital structure and makes adjustments to it in the light of changes in economic conditions and
the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group may adjust
the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt.
The gearing ratios at 31 December 2018 and 2017 were as follows:
Total borrowings
Cash and cash equivalents
Net debt/(cash surplus)
Total equity
Borrowings
Overall financing
Gearing ratio
The gearing ratios are in line with the management’s working capital financing strategy.
23. Events after the reporting period
There have been no significant post balance sheet events.
2018
£’000
454
(374)
80
1,999
80
2,079
4%
2017
£’000
2
(631)
(629)
1,583
-
1,583
0%
The following pages contain the financial statements for the parent company, prepared in accordance
with the Financial Reporting Standard 101, ‘Reduced Disclosure Framework’ (‘FRS 101’)
57
COMPANy STATEMENT
OF FINANCIAL POSITION
as at 31 December 2018
Company number 03676824
Fixed assets
Property, plant and equipment
Investments
Current assets
Trade and other receivables
Cash and cash equivalents
Trade and other payables: amounts falling due within one year
Net current assets
Net assets
Equity
Share capital
Share premium account
Retained earnings
Note
25
26
27
28
30
2018
£’000
-
1,150
1,150
2,352
5
2,357
110
2,247
3,397
1,543
333
1,521
3,397
2017
£’000
1
1,150
1,151
1,516
38
1,554
59
1,495
2,646
1,516
-
1,130
2,646
The Company has applied the exemption under section 408 of the Companies Act 2006 not to present a statement of
comprehensive income for the year ended 31 December 2018.
The profit after tax for the financial year 2018 within the annual report and accounts of the Company was £383,000
(2017: £227,000).
These annual report and accounts were approved by the Directors on 14 March 2019 and are signed on their behalf by:
I Bristow, FCCA
Chief Financial Officer
14 march 2019
The accompanying notes form an integral part of these annual report and accounts.
58
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G
O
V
E
R
N
A
N
C
E
I
I
F
N
A
N
C
A
L
S
T
A
T
E
M
E
N
T
S
COMPANy STATEMENT
OF ChANGES IN EqUITy
for the year ended 31 December 2018
For the year to 31 December 2018
Balance at 1 January 2018
Issue of share capital
Share-based payments
Transactions with owners
Total comprehensive income for the year
Balance at 31 December 2018
For the year to 31 December 2017
Balance at 1 January 2017
Issue of share capital
Capital reduction
Transactions with owners
Total comprehensive income for the year
Share
capital
£’000
Share
premium
£’000
Retained
earnings
£’000
Total equity
£’000
1,516
27
-
27
1,543
-
333
-
333
-
333
1,130
2,646
-
8
8
383
1,521
360
8
368
383
3,397
1,499
3,533
(2,705)
2,327
17
-
17
-
75
(3,608)
(3,533)
-
-
3,608
3,608
227
92
-
92
277
Balance at 31 December 2017
1,516
-
1,130
2,646
The accompanying notes form an integral part of these annual report and accounts.
59
NOTES TO ThE
COMPANy STATEMENT
OF FINANCIAL POSITION
24. Basis of preparation and significant accounting policies
Basis of preparation
Symphony Environmental Technologies plc (“The
Company”), is a public limited company. It is incorporated
and domiciled in England (Company number 03676824).
The address of its registered office is 6 Elstree Gate, Elstree
Way, Borehamwood, Hertfordshire, WD6 1JD, England.
The Company’s shares are listed on the AIM market of the
London Stock Exchange.
The principal activity of the Company is to hold
investments in subsidiaries which develop and supply
environmental plastic additives and products, and develop
waste to value systems.
The individual annual report and accounts have been
prepared in accordance with United Kingdom accounting
standards, including Financial Reporting Standard 101 –
‘Reduced Disclosure Framework: Disclosure exemptions
from EU-adopted IFRS for qualifying entities’ (‘FRS 101’),
and with the Companies Act 2006. This separate annual
report and accounts have been prepared on a going
concern basis, under the historical cost basis, as modified
by the recognition of certain financial assets and liabilities
measured at fair value.
The Company has taken advantage of section 408 of
the Companies Act 2006 and has not included its own
statement of comprehensive income in these annual
report and accounts.
The annual report and accounts are presented in Sterling,
the functional and presentational currency of the
Company and are expressed in round thousands unless
otherwise stated (£’000s).
Transition to FRS101
This is the first financial year that the Company has
presented its financial statements in accordance with FRS
101. For financial years up to and including the year ended
31 December 2017, the Company prepared its financial
statements in accordance with FRS 102.
The Company’s date of transition to FRS 101 is therefore
1 January 2017.
The Company’s policies applied under the entities previous
accounting framework are not materially different to
FRS 102 and have not impacted on equity or profit and loss.
The principal accounting policies outlined below have
been applied:
Financial reporting standard 101 - reduced
disclosure exemptions
The Company has taken advantage of the following
disclosure exemptions under FRS 101:
the requirements of IAS 7 Statement of Cash Flows
the requirements of IFRS 7 Financial Instruments:
Disclosures
the requirements of paragraphs 91-99 of IFRS 13
Fair Value Measurement
the requirement in paragraph 38 of IAS 1 ‘Presentation of
Financial Statements’ to present comparative information
in respect of:
• paragraph 79(a)(iv) of IAS 1;
• paragraph 73(e) of IAS 16 Property, Plant and Equipment;
• paragraph 118(e) of IAS 38 Intangible Assets;
the requirements of paragraphs 10(d), 10(f), 16, 38A, 38B,
38C, 38D, 40A, 40B, 40C, 40D, 111 and 134-136 of IAS 1
Presentation of Financial Statements
the requirements of paragraphs 30 and 31 of IAS 8
Accounting Policies, Changes in Accounting Estimates
and Errors
the requirements of paragraph 17 of IAS 24 Related Party
Disclosures
the requirements in IAS 24 Related Party Disclosures to
disclose related party transactions entered into between
two or more members of a group, provided that any
subsidiary which is a party to the transaction is wholly
owned by such a member
the requirements of paragraphs 134(d)-134(f) and 135(c)-
135(e) of IAS 36 Impairment of Assets.
Information on new standards, amendments and
interpretations that are relevant to the Company’s annual
report and accounts is provided below. Certain other new
standards and interpretations have been issued but are
not expected to have a material impact on the Company’s
annual report and accounts. This include IFRS 15, which is
not relevant to the Company given it has no revenue.
IFRS 9 ‘Financial Instruments’
In the current year, the Company has applied IFRS 9
Financial Instruments (as revised in July 2014) and the
related consequential amendments to other IFRS Standards
that are effective for an annual period that begins on or
after 1 January 2018. The IASB have released IFRS 9 following
completion of the project to replace IAS 39 ‘Financial
Instruments: Recognition and Measurement’. The new
standard introduces extensive changes to IAS 39’s guidance
on the classification and measurement of financial assets
and introduces a new ‘expected credit loss’ model for the
impairment of financial assets. IFRS 9 also provides new
guidance on the application of hedge accounting. IFRS 9
is effective for annual reporting periods beginning on
or after 1 January 2018 and has been endorsed by the
European Union. The Company’s management have
performed an impact assessment of the effects of IFRS 9
on the 2018 figures and there are not any material changes
to the Company’s annual report and accounts. The main
area that will be impacted is the measurement of the fair
value of forward exchange contracts, which are immaterial
in value and the credit risk is low.
Property, plant and equipment
Tangible fixed assets are stated at cost, net of depreciation
and any provision for impairment.
60
NOTES TO ThE
COMPANy STATEMENT
OF FINANCIAL POSITION
Depreciation is calculated so as to write off the cost of
an asset, less its estimated residual value, over the useful
economic life of that asset as follows:
Motor vehicles - 25% reducing balance.
Taxation
Current tax is the tax currently payable based on taxable
profit for the year. Management periodically evaluates
positions taken in tax returns with respect to situations in
which applicable tax regulation is subject to interpretation.
It establishes provisions where appropriate on the basis of
amounts expected to be paid to the tax authorities.
Deferred tax is recognised in respect of all timing
differences that have originated but not reversed at the
balance sheet date where transactions or events have
occurred at that date that will result in an obligation to pay
more, or a right to pay less or to receive more tax, with the
following exception: deferred tax assets are recognised
only to the extent that the directors consider that it is more
likely than not that there will be suitable taxable profits
from which the future reversal of the underlying timing
differences can be deducted.
Deferred tax is measured on an undiscounted basis at the
tax rates that are expected to apply in the periods in which
timing differences reverse, based on tax rates and laws
enacted or substantively enacted at the balance sheet date.
Foreign currencies
Monetary assets and liabilities in foreign currencies are
translated into Sterling at the rates of exchange ruling at the
balance sheet date. Transactions in foreign currencies are
translated into Sterling at the rate of exchange ruling at the
date of the transaction. Exchange differences are taken into
account in arriving at the operating profit.
Investments - Company
Investments in subsidiaries are accounted for at cost less
impairment in the individual annual report and accounts.
Impairment of assets
At each reporting date fixed assets are reviewed to
determine whether there is any indication that those assets
have suffered an impairment loss. If there is an indication
of possible impairment, the recoverable amount of any
affected asset is estimated and compared with its carrying
amount. If estimated recoverable amount is lower, the
carrying amount is reduced to its estimated recoverable
amount, and an impairment loss is charged immediately
to statement of comprehensive income.
If an impairment loss subsequently reverses, the carry
amount of the asset is increased to the revised estimate of
its recoverable amount, but not in excess of the amount
that would have been determined had no impairment loss
been recognised for the asset in prior years. A reversal of an
impairment loss is recognised immediately in statement of
comprehensive income.
Financial instruments
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements
entered into. An equity instrument is any contract that
evidences a residual interest in the assets of the entity after
deducting all of its financial liabilities.
Where the contractual obligations of the financial
instruments (including share capital) are equivalent to
a similar debt instrument, those financial instruments
are classified as financial liabilities. Financial liabilities are
presented as such in the balance sheet. Finance costs are
calculated so as to produce a constant rate of return on the
outstanding liability.
Where the contractual terms of share capital do not have
any terms meeting the definition of a financial liability then
this is classified as an equity instrument. Dividends and
distributions relating to equity instruments are debited
direct to equity.
Equity-settled share-based payments
Warrants and options granted to employees which
relate to salary sacrifices of employees employed by this
company are attributed a fair value by reference to the
services provided. This fair value is charged to statement
of comprehensive income over the vesting period when
the service is provided with a corresponding credit taken
to shareholders’ funds.
Significant judgements and estimates
Preparation of the annual report and accounts requires
management to make significant judgements and
estimates. The items in the parent company annual
report and accounts where these judgements have
been made include:
Judgements - impairment
An impairment loss is recognised for the amount by
which the asset’s or cash generating unit’s carrying
amount exceeds its recoverable amount. To determine
the recoverable amount, management estimates
expected future cash flows from each cash-generating
unit and determines a suitable discount rate in order
to calculate the present value of those cash flows. In
the process of measuring expected future cash flows
management makes assumptions about future operating
results. These assumptions relate to future events and
circumstances. In most cases, determining the applicable
discount rate involves estimating the appropriate
adjustment to market risk and the appropriate adjustment
to asset-specific risk factors. No impairment has been
recognised during the period.
There are no items in the parent company annual report
and accounts where estimates have been made.
61
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NOTES TO ThE
COMPANy STATEMENT
OF FINANCIAL POSITION CONTINUED
25. Property, plant and equipment
motor
vehicles
£’000
Total
£’000
Cost
At 1 January 2018
At 31 December 2018
Depreciation
At 1 January 2018
Charge for the year
At 31 December 2018
Net book value
At 31 December 2018
At 31 December 2017
26. Investments
Cost
At 1 January 2018
At 31 December 2018
Impairment
At 1 January 2018
At 31 December 2018
Net book value
At 31 December 2018
At 31 December 2017
Group undertakings are detailed in note 12.
27. Trade and other receivables
Amounts owed by Group undertakings
VAT
Prepayments
14
14
13
1
14
-
1
Shares in
Group
Undertaking
£’000
2,150
2,150
1,000
1,000
1,150
1,150
2018
£’000
2,331
12
9
2,352
14
14
13
1
14
-
1
Total
£’000
2,150
2,150
1,000
1,000
1,150
1,150
2017
£’000
1,507
5
4
1,516
The Directors consider that the carrying value of amounts owed by Group undertakings approximate to their fair values.
Included in the amounts owed by Group undertakings is an adjustment for expected credit losses of £3,394,000
(2017: £3,394,000).
The Company applies the IFRS 9 simplified approach to measuring expected credit losses (ECL) which uses a lifetime
expected loss allowance in respect to amounts owed by Group undertakings. The ECL balance has been determined based
on historical data available to management in addition to forward looking information utilising management knowledge.
Based on the analysis performed there has been no material impact on the transition to ECL.
62
NOTES TO ThE
COMPANy STATEMENT
OF FINANCIAL POSITION CONTINUED
28. Trade and other payables: amounts falling due within one year
Trade payables
Accruals
2018
£’000
69
41
110
2017
£’000
17
42
59
29. Contingent liabilities
The Company has guaranteed all monies due to its bankers by Symphony Environmental Limited. At 31 December 2018 the
net indebtedness of these companies amounted to £454,000 (2017: £nil). The Company has guaranteed the lease rental
payable by Symphony Environmental Limited in respect to the Group’s head office in Borehamwood amounting to £132,000
as at 31 December 2018 (2017: £264,000).
30. Share capital
The Company’s share capital is detailed in note 16 of the Group consolidated accounts.
31. Directors and employees
All employees of Symphony Environmental Technologies plc are Directors. See note 6 of the Group consolidated accounts.
The average number of staff employed by the Company during the financial year amounted to:
Management
The aggregate payroll costs of the above were:
Wages and salaries
Social security costs
Share-based payment
2018
No.
4
2018
£’000
60
10
8
78
2017
No.
3
2017
£’000
48
3
-
51
The company has taken advantage of the FRS 101 exemption that allows intra-Group transactions with a 100% subsidiary to
not be disclosed. There were no other related party transactions throughout the period.
63
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COMPANy
INFORMATION
Company registration number
03676824.
Registered office
6 Elstree Gate
Elstree Way
Borehamwood
Hertfordshire
WD6 1JD
Directors
Nirj deva, DL, FRSA, MEP
Non-Executive Chairman
Michael Laurier
Chief Executive Officer
Ian Bristow, FCCA
Chief Financial Officer and Company Secretary
Michael Stephen, LL.M
Commercial Director & Deputy Chairman
Nicolas Clavel
Independent Non-Executive Director
Shaun Robinson
Non-Executive Director
Robert (Bob) Wigley, BSc, HonDBA, FCA
Independent Non-Executive Director
Secretary
Ian Bristow
Nominated Adviser and Broker
Cantor Fitzgerald Europe
One Churchill Place
Canary Wharf
London
EC14 5RB
Bankers
HSBC Bank Plc
103 Station Road
Edgware
Middlesex
HA8 7JJ
Solicitors
CMS Cameron McKenna Nabarro Olswang LLP
Cannon Place
78 Cannon Street
London
EC4N 6AF
Auditor
Mazars LLP
Chartered Accountants and
Statutory Auditor
Tower Bridge House
St Katharine’s Way
London
E1W 1DD
Registrars
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
64
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A scientifically
A scientifically
proven technology
proven technology
www.symphonyenvironmental.com
www.symphonyenvironmental.com
@ Symphony Environmental Technologies
@ Symphony Environmental Technologies