Company Number: 03676824
Financial highlights:
• Group revenues £8.23 million (2018: £8.80 million)
• Gross profit £3.78 million (2018: £4.13 million)
• Reported loss before tax £0.70 million (2018: profit £0.04 million)
• Basic loss per share 0.41p (2018: earnings per share 0.03p)
• Cash used in operations £0.73 million (2018: £1.01 million)
• Net current assets £2.85 million (2018: £1.71 million)
Business highlights:
• Subscription completed for new shares raising £1.9 million (net)
• Grupo Bimbo, the world’s largest bakery, announces expansion of its biodegradable packaging
programme, and new packaging showing Symphony’s d2w brand
• New and first significant order for d2w agricultural grade
• Major launch of d2p “Protector” products in Bahrain
• Awarded London Stock Exchange Green Economy Classification & Mark
Post year-end
FDA approves Symphony’s antibacterial packaging for bread; commercial trials ongoing
• Q1 2020 revenues increase by 53% to £2.45 million (Q1 2019: £1.60 million)
•
• New European orders in May for d2p antimicrobial gloves exceeding £0.5 million
•
• Single use plastic bans outside the EU being postponed or overturned due to concern for people’s safety
Increasing activity for other d2p additives and products
•
and hygiene taking priority
The Group has not been materially affected by COVID-19 and accordingly has not needed to utilise any
of the Government COVID-19 support packages
Chairman’s Statement
We are at a time of unprecedented change. The current COVID-19 pandemic is likely to permanently alter human
outlook and consumption trends, further establishing the environmental, social and governance (“ESG”) concerns
of key stakeholders of the vast majority of organisations.
Symphony’s proposition gathered further ESG momentum during 2019 by increasing key sales and public
relations resources, as well as further gaining international recognition by customers, governments and other
bodies, with the award of new contracts, approved supplier accreditations and a Green Economy Classification
and Mark. These achievements were accompanied by a small reduction in revenues during 2019, but that year
in isolation does not capture the momentum of the Group, as demonstrated by a 53% increase in revenues during
the first quarter of 2020 to £2.45m versus £1.60m for the same period last year.
Symphony is at the forefront of the plastics debate in key territories around the World and has established
specialist teams to interact with governments, NGO’s, and corporates. Our legislative activities are mainly
country-specific, and we have substantially invested in regional advisory and lobbying professionals primarily in
the Middle East and Latin America, which are considering legislative changes towards biodegradable and
compostable products, thereby providing significant opportunities for our range of d2w and d2c products.
In 2019, the world’s largest bakery company, Grupo Bimbo, publicly announced of its d2w biodegradable
packaging programme (originally launched in 2008), and for the first time their packaging showed our d2w
registered trademark. Their d2w biodegradable packaging expansion process is ongoing.
In 2019, the three-stage regulation for making plastic packaging in Saudi Arabia oxo-biodegradable continued to
be enforced, but with phases two and three for additional products having been delayed from the original
published timetable, with no date yet been made public. The first stage, which is significant in itself, and includes
carrier bags and refuse sacks, is ongoing, and since the start of 2020 some products have been brought forward
from later stages to this first stage. In addition, enforcement activity has recently increased to ensure better
- 1 -
compliance with stage one.
Significantly, since the year end, the Company announced in February that it had received USA FDA approval
for its antibacterial additive for plastic bread packaging. Several customer trials and evaluations which were
prohibited before FDA approval have commenced following earlier successful small-scale studies.
With public health and hygiene being an urgent issue, we are seeing an increase in activity in our d2p antimicrobial
technologies and products. During May 2020, we received new orders for d2p treated gloves totalling more than
£500,000. As previously announced, we have commissioned antiviral tests, which include some members of the
coronavirus family of viruses, and we expect results by the end of June. We have not yet identified a laboratory
willing and able to test for COVID-19 itself, and we continue to search.
The COVID-19 pandemic has so far had little negative impact on the operations of the Group, and staff have
adapted well to working at home. We have seen minor cashflow and order delays in some territories, but at
present our main markets are generally stable as our technology is mainly used in food packaging. In terms of
price, availability, hygiene and effectiveness, it is our view that plastics are currently the ideal product for the
protection of people (through PPE) and the packaging of food and goods. d2w improves flexible plastics making
them biodegradable and reducing their negative impact on the environment, and our d2p range enhances plastics
and rubber by including long-lasting antimicrobial benefits.
Despite current global uncertainties, we are confident that our technologies are well placed to benefit key
concerns over hygiene and the environment. Many countries around the world are starting to ease their
lockdowns, but we continue to make decisions which aim to keep the Group in the best financial position possible
should there be any significant negative effects on revenue or cashflow. Our staff are working effectively during
these times, and we have not needed to utilise any Government COVID-19 support packages.
I would therefore like to thank the Board and our staff for all their resilience and extremely hard and dedicated
work to keep Symphony in its strong position during these challenging times. Further thanks also to our distributor
network for all their hard work and despite these uncertain times the Board remains optimistic for the future.
N Clavel
Interim Chairman
22 May 2020
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Company Information
Company registration number
03676824
Registered office
Directors
6 Elstree Gate
Elstree Way
Borehamwood
Hertfordshire
WD6 1JD
Michael Laurier – Chief Executive Officer
Ian Bristow FCCA – Chief Financial Officer
Michael Stephen, LL.M – Commercial Director & Deputy Chairman
Nicolas Clavel – Non-Executive Director & Interim Chairman
Shaun Robinson – Non-Executive Director
Robert (Bob) Wigley – Non-Executive Director
Secretary
Ian Bristow
Nominated Adviser and Broker
Bankers
Solicitors
Auditor
Registrars
Cantor Fitzgerald Europe
One Churchill Place
Canary Wharf
London
EC14 5RB
HSBC Bank Plc
103 Station Road
Edgware
Middlesex
HA8 7JJ
Eversheds Sutherland
1 Wood Street
London
EC2V 7WS
Mazars LLP
Chartered Accountants and
Statutory Auditor
Tower Bridge House
St Katharine’s Way
London
E1W 1DD
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4T
- 3 -
Chief Executive’s Review
Introduction
The Group continues at this pivotal period to see a strengthening of its underlying business and key
drivers. For our d2p range of technologies, most of our earlier R&D developments are now complete and
the commercial sales process for many different applications is ongoing in areas such as healthcare
products, antimicrobial gloves, and additives for use in drinking and irrigation waterpipes. In addition, we
have continued to progress our many different d2p formulations for flame retardant plastics, together with
odour and ethylene adsorber masterbatches. For d2w, the legislative position in some markets is showing
progress - such as in the Middle East and Latin America.
Legislative actions around the world to ban or restrict the use of single use plastics, described in the press
and in our earlier announcements, created a positive opportunity for our global representatives to engage
at government level and in the media, so as to be part of the debate. These activities continued throughout
2019 and are ongoing. COVID-19 has strengthened the global requirement for single use plastic which is
ideal for our d2w technology. Multiple-use plastics are more problematic for hosting and accumulating
harmful microbes and there is an opportunity for our d2p antimicrobial technology.
Grupo Bimbo's public d2w event on 20 August 2019 was significant as they expand their programme of
adopting more environmentally friendly packaging and for the first time using our d2w logo on their
products.
During 2019, we continued to develop our d2w technology into many new applications such as footwear,
non-woven polypropylene for use in PPE type products, and also for agricultural products, which saw new
commercial sales.
Our strategy continues to be to invest into the legislative drivers for d2w type biodegradable technologies
together with further commercialising our developed d2p technologies within the Group's existing
operational framework.
Trading results
Group revenues decreased by 6.5% to £8.23 million from £8.80 million in 2018. Gross profit margins
decreased slightly to 45.9% (2018: 46.9%). As a result, the contribution from gross profit decreased to
£3.78 million from £4.13 million in 2018.
As announced on 17 December 2019, revenues for the full year were affected by inventory adjustments
by some of our customers waiting for legislative clarification in certain markets. These factors persisted
during the year, as both business drivers, legislation and enforcement activities regarding the manufacture
of plastics, remained in a fluid period of change.
Costs increased by 5.8% to £4.08 million (2018: £3.85 million) due to increased selling resource together
with advisory costs associated with legislative and regulatory situations as described earlier. Staff costs
also increased during the period in the marketing and technical departments. The Group expensed R&D
costs of £0.63 million in 2019 (2018: £0.66 million). An R&D tax credit of £37,000 (2018: £10,000) was
confirmed receivable as at the year-end relating to previous periods. A further R&D tax credit will be
receivable with respect to 2019.
The Group adopted IFRS 16 during 2019 which requires lessees to account for leases 'on-balance sheet'
by recognising a right-of-use asset together with its respective lease liability. The value of the recognised
'right-of-use asset' as at 1 January 2019 was £0.76 million which related primarily to the Group's head
office. This new policy resulted in additional non-cash charges of £37,000 made to the income statement
for the year from depreciation on the right-of-use asset and interest expense on lease liabilities.
- 4 -
Adjusted EBITDA before R&D and the additional communication and marketing costs is calculated as
follows:
Operating (loss)/profit
Add:
Depreciation (non right-of-use)
Amortisation
R&D expenditure
Increased marketing, communication and
other brand protection costs
Adjusted EBITDA
2019
£’000
(622)
76
17
627
331
429
2018
£’000
64
81
16
664
357
1,182
Reported operating loss was £0.62 million (2018: profit £0.06 million) and loss after tax of £0.66 million
(2018: profit £0.05 million) with basic loss per share of 0.41 pence (2018: earnings per share 0.03 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 where
possible in US Dollars and utilises bank forward currency contract agreements to minimise exchange risk.
As at 31 December 2019, the Group had a net balance of US Dollar assets (US Dollar cash balances and
receivables less overdrafts and payables) totalling $1.90 million (2018: $1.10 million). To mitigate this the
Group had bank forward currency contracts to sell 1.25 million US Dollars and receive a fixed amount of
sterling as at 31 December 2019 (31 December 2018: nil US Dollars). The Group is experiencing higher
volatility in Sterling/US Dollar exchange rate as a result of the uncertainties currently surrounding Brexit.
Balance sheet and cash flow
The Group had net cash of £0.88 million at 31 December 2019 (2018: net debt of £0.08 million). The
Group used cash of £0.73 million from operations (2018: cash used of £1.01 million) primarily as a result
of the operating loss for the period.
During the year the Group raised net £1.9 million by way of a share subscription. The Group also has a
£1.5 million invoice finance facility with HSBC Bank which was not drawn down as at 31 December 2019
(2018: £0.45 million).
As a result of the share subscription, net current assets increased to £2.85 million at 31 December 2019
(2018: £1.71 million).
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 88.7% of the
Group’s revenues were generated outside the EU mainland in 2019 (2018: 85.4%). 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.
COVID-19
COVID-19 is causing general uncertainty which may affect several markets in which Symphony operates.
These may have a disruptive impact on operations (customer or supplier disruption) or may negatively
affect the Group’s finances (customer bad debt or ability of customer or suppliers to carry on trading). The
Group uses multiple supply sources and continues in the main to credit insure receivables or do business
on a letter of credit or proforma basis. So far, the effects to Group operations and finances have been
minimal.
The Group’s products and markets are not negatively affected by the pandemic and on the contrary could
strengthen as plastics are integral in food and human protection. The Group has modelled several
downside scenarios and the Board is comfortable that the Group’s balance sheet and working capital is
sufficient to withstand such significant falls in revenue.
Current trading and outlook
- 5 -
As announced on 6 April 2020, the new trading year has started strongly, with revenues for the first quarter
ended 31 March 2020 increasing by 53% to £2.45 million compared with £1.60 million for the first quarter
of 2019.
The Group’s cash and cash availability as at 21 May 2020 was more than £1.0 million. The Group does
not expect to require any additional cash in the next twelve months and the Board considers the Group to
be in a strong financial position to enable it to maximise the opportunities available within the markets it
is in, and with its d2w, d2p and d2c developed and developing product range.
d2w Oxo-biodegradable plastic technology
It is our belief that there is a strong global outlook for d2w technology underpinned by regulatory, legislative
and market forces in many of the 70 plus markets in which we are active. In addition, and as a result of
the current COVID-19 pandemic, we have seen several plastic bag bans either suspended or overturned.
This is no longer just a Symphony fight, as the plastic industry are trying to avoid closure by the global
drive to move away from plastics to other materials or nothing. Because of this, we are collaborating with
the industry in several countries to avoid a ban by using d2w technology which can help resolve the
pressing issue of plastic pollution, and in particular, microplastics.
The debate on the use of plastics might have hit an inflection point as COVID-19 brought forth fears that
reusable shopping bags are used at the expense of optimal hygienic behaviour. In the United States,
states including California, New York, and Massachusetts, which spearheaded the campaign against
single-use plastic bags, are now pivoting towards promoting their use by either suspending or postponing
the bans. Countries across the world have had a similar response by either suspending bans or removing
tariffs required to buy plastic bags online. Similarly, the United Kingdom postponed its ban on the use of
single-use plastic straws in the restaurant industry.
With recycling efforts being stifled and most of the plastic waste ending up in landfills, oxo-biodegradable
plastic continues to provide a timely solution to sustainable plastic consumption and a solution to the issue
of plastic litter pollution on land and oceans.
d2p Antimicrobial range of technologies
Demand for plastic materials (such as PPE and food packaging) containing antimicrobial properties is
also expected to increase. As announced on 6 April 2020 we have commissioned a laboratory to conduct
antiviral tests on our d2p antimicrobial technology and anticipate that if we get a satisfactory result, this
will significantly accelerate interest in this technology. We anticipate updating the market by the end of
June.
Since the year-end, the U.S. Food & Drugs Administration (FDA) has approved Symphony’s d2p
antibacterial technology for use in certain polyethylene film for wrapping bread. Approval, which is not
time limited and is effective only for Symphony, was given under the Food Contact Notification procedure.
We are progressing this commercially despite some minor delays caused by COVID-19.
The Group’s 25-year investment into a growing, but synergistic range of products, is well suited to today’s
global demand for low cost technologies and products that are non-disruptive and that can help protect
human health and the environment. It is encouraging to see new European orders recently placed for d2p
treated gloves of more than £500,000, together with increased global enquiries for other d2p products.
The current situation due to COVID-19 is unprecedented and the overall economic impact is currently
unknown. The Board is encouraged by the resilience shown by the Group’s systems and technologies to
date, and the opportunities for our range of technologies. We look to the future with confidence, although
the financial year ending 31 December 2020 cannot as yet be fully assessed. Accordingly, the Board
believes it would be inappropriate to provide forward-looking financial guidance to investors and analysts
at this time.
M Laurier
Chief Executive
22 May 2020
- 6 -
Strategic Report
Principal activities, business review and future developments
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 1-2 together with the Chief
Executive's Review on pages 4-6. Future developments are summarised in the Outlook section of the
Chief Executive's Review on page 5-6.
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
2019
2018 Method of calculation
Revenue (£’000)
8,225
8,802
Revenues for the Group.
Gross profit margin (%)
45.9%
46.9%
The ratio of gross profit to sales.
Adjusted EBITDA
429
1,182
EBITDA adjusted
operating performance
to view underlying
Number of distributors
72
72
Number of distribution agreements
Adjusted EBITDA being EBITDA before R&D and additional communication and marketing costs is
calculated as follows:
Operating (loss)/profit
Add:
Depreciation (non right-of-use)
Amortisation
R&D expenditure
Increased marketing, communication
and brand protection costs
Adjusted EBITDA
2019
£’000
(622)
76
17
627
331
429
2018
£’000
64
81
16
664
357
1,182
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 22 May 2020.
M Laurier
Chief Executive
22 May 2020
- 7 -
Directors’ Duties
This statement describes how the Directors have regard to the matters set out in section 172 (1) (a) to
(f) of the Companies Act 2006 when performing their duties.
The Board’s main duty is to promote the Company and Group for the benefit of shareholders and
does this by developing products which it believes will be commercially successful, and by
implementing routes and channels in order to maximise revenues generated by these products. The
Board considers this in the long-term view and have over many years developed its networks of
customers and extensive product offerings.
During the year the Board made certain decisions relating to the operations of the Group and
developments of its products. Two key decisions were:
Expenditure was increased in relation to sales resources and lobbying activities in certain key
markets that the Group is in. These markets were moving towards creating regulations which
would affect the Group’s products, and as the Group already had been successful in lobby in
area of the World which already had positive regulatory environments for the Group’s products,
it was considered in the long-term interest of the Group to increase these targeted resources.
Application was made for United States FDA approval for one of its d2p antimicrobial products.
This was a complex and time-consuming exercise involving experts in the USA. This decision
was made with long-term success in mind as a successful outcome would enable the Group to
expand revenue in lucrative and established markets that it is already in.
The Board is committed to a culture of openness and integrity. There is an open-door policy for all
staff, and the executives make themselves available to all members of staff at all times. Training is
actively encouraged.
The Group operates an extensive distributor network with a number of distributors having been selling
Symphony’s products for ten years or more. The Group works alongside its distributors in helping
end-customers with their packaging solutions. Every three years the Group holds distributor
conferences and works alongside them at exhibitions held globally. The Group uses a small number
of dedicated suppliers and works with them on many areas of product development. More widely, the
Group and its associates are constantly engaged with governmental decision makers and associated
organisations in order to add input to developing key packaging regulations.
The Group’s suite of d2w, d2p and d2c products have been developed with human health and the
environment in mind. The Board believes that the Group’s technologies enable end users to fulfil
many of their own community and environmental criteria. The Group also uses factories located as
close to its customers as practicably possible reducing the transport carbon footprint.
The Group is certified to ISO 9001 and ISO 14001. The Group is also on the approved lists of many
Government regulatory authorities including SASO (Saudi Arabia) and ESMA (UAE).
- 8 -
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
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.
Publicity Risk Negative
media
comments
Market Risk
Market
competition
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.
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.
Financial
Risk
Foreign
exchange
rate
fluctuation
Various Risks COVID-19
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 fluctuations from the recent
volatility in the US Dollar versus the
Great British Pound due to the
uncertainties currently surrounding
Brexit.
COVID is causing general uncertainty
which may affect one or a number of
markets which Symphony is in. These
may affect operations (customer or
supplier disruption) and financial
(customer bad debt or ability of
customer or suppliers to carry on
trade trading).
- 9 -
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.
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.
The Group mitigates this
risk by purchasing, where
practicable, in currencies to
match revenues. The
Group also has foreign
exchange forward
contracts and other
facilities with its bank to
use as and when
appropriate.
The Group’s products and
markets are not negatively
affected by the crises and
on the contrary could
strengthen as plastics are
integral in food and human
protection.
Forecasts have been
prepared and the Group is
in a strong enough position
to withstand a significant
fall in revenue
expectations.
The Group uses multiple
supply sources and
continues in the main to
insure receivables or trade
on a letter of credit or
proforma basis.
- 10 -
Board of Directors
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
Chief Financial Officer
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
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.
Nicolas Clavel
Independent Non-Executive Director and Interim Chairman
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
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 and Bink Ltd. He is
Non-Executive Director of the Qatar Finance Centre Authority. From 2004-2009 he was Chairman of
- 11 -
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.
- 12 -
Chairman’s Corporate Governance Statement
Dear Shareholder
As Interim 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 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 have adopted 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 continue 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 enables 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 Group’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 which 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 pages 9-10, 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 relations web interviews, investor shows, and the Company’s Annual Report
and Accounts.
The Annual General Meeting of the Company, normally attended by all the Directors, provides the
- 13 -
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 Principal Risks and Uncertainties on pages 9-10.
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. 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.
- 14 -
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 three Executive Directors, Michael Laurier, Ian Bristow and Michael Stephen, and
three Non-Executive Directors, Shaun Robinson, Nicolas Clavel and Robert Wigley. Nicolas Clavel is
currently the Company’s Interim 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 Group.
Shaun Robinson has an interest in Somerston Environmental Technologies Limited, which has a holding
in excess of 20% in the Group. For this reason he is not considered independent as required by the QCA
Code. Shaun Robinson adds 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. Biographies for each of the Directors are outlined on pages 11-12.
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 2019 is shown below.
Director
Position
Board Meetings
attended in
2019
Audit
Committee
meetings
Remuneration
Committee
meetings
Michael Laurier
Chief Executive Officer
Ian Bristow
Chief Financial Officer
Michael Stephen
Commercial Director &
Deputy Chairman
Nicholas Clavel
Shaun Robinson
Non-Executive Director
& Interim Chairman
Non-Executive Director
Robert Wigley
Non-Executive Director
Nirj Deva
(resigned 7
November 2019)
Ex Non-Executive
Chairman
4/4
4/4
3/4
4/4
4/4
4/4
3/3
2/2
2/2
1/2
2/2
1/2
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
- 15 -
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 meeting.
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 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 encourages Directors to receive training on relevant
developments if required. The Board reviews the appropriateness and opportunity for continuing
professional development in order to keep each Director’s skillset up-to-date.
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 six 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. The current position as
Chairman is an interim measure and the Board will seek a suitable permeant Chairman when appropriate.
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 is considering
succession planning as part of its regular review of Board effectiveness and will implement a policy at the
appropriate time.
The Board is committed to undertaking reviews of Board and Committee performance and of individual
Board members which will be carried out regularly as part of a board performance evaluation and in
particular that:
- 16 -
- their contribution is relevant and effective;
- that they are committed; and
- where relevant, they have maintained their independence.
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.
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. The Board reviews its corporate governance arrangements regularly
and expects them 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 its 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:
- 17 -
oversee the Group’s strategic objectives and policies;
review of performance and controls;
oversee all aspects of the Company’s finances;
decide on key business transactions;
•
•
•
•
• manage risk; and
• manage the interests of all 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.
Audit Committee
The Audit Committee Report is on page 24.
Committee members and attendance
The Audit Committee currently comprises Nicolas Clavel (Chair) and Shaun Robinson. The Board is in
the process of reviewing the members as Nicolas Clavel is currently also Interim Chairman of the Board.
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.
Remuneration Committee
The Remuneration Committee Report is on pages 25-26.
Committee members and attendance
Symphony’s Remuneration Committee currently comprises Shaun Robinson (chair) and 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 Board is in the process of
reviewing the members as Nicolas Clavel is currently also Interim Chairman of the Board.
- 18 -
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:
https://www.symphonyenvironmental.com/corporate-information/corporate-governance
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 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 Annual General Meetings. All 2019
AGM resolutions were passed comfortably. The Board already discloses the result of general meetings
by way of an announcement, which 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 Clavel
Interim Chairman
22 May 2020
- 19 -
Directors’ Report
The Directors present their report and the audited annual report and accounts of the Group for the year
ended 31 December 2019.
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 and future developments
The Strategic Report on page 7 provides a review of the business, the Group’s trading for the year ended
31 December 2019, key performance indicators, and an indication of future prospects and developments.
The principal risks and uncertainties facing the business and on pages 9-10. 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 loss for the year after taxation amounted to £660,000 (2018: profit £48,000).
The Directors do not recommend the payment of a dividend (2018: £nil).
The results for the year ended 31 December 2019 are set out in the consolidated statement of
comprehensive income on page 33.
Directors
The Directors who served during the year ended 31 December 2019 and up to the date of signing the
financial statements were as follows:
N Clavel – Non-Executive Director & Interim Chairman
M Laurier – Chief Executive Officer
I Bristow FCCA – Chief Financial Officer
M Stephen – Commercial Director & Deputy Chairman
S Robinson – Non-Executive Director
R Wigley – Non-Executive Director
N Deva DL, FRSA (resigned 7 November 2019)
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
M Laurier
I Bristow
M Stephen
N Clavel
S Robinson
R Wigley
At 31 December
2019
At 1January
2019
23,424,510
1,163,925
1,352,176
550,000
11,513,546
200,000
23,424,510
1,163,925
1,352,176
550,000
11,513,546
200,000
- 20 -
Details of the Directors’ interests in options granted under the Group’s share scheme are set out in the
Remuneration Committee Report on page 26.
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 pages 9-10. 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 17 to the annual report and accounts. Details of employee share options and warrants are also set
out in note 17.
Significant shareholdings
The significant shareholders in the Company (holding shares in excess of 3%) as at 31 December 2019
are as follows:
Shareholder
Somerston Capital
M Laurier
Vincel Investments
S Robinson*
% total shareholding
19.83%
13.78%
9.09%
6.77%
* Including S Robinson’s interests in Somerston Environmental Technologies Limited shareholding
Political donations
During the year ended 31 December 2019 the Group made no political donations (2018: £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. The operating loss for the year of £0.62 million was more than mitigated by the £1.9 million
share subscription received during the year. The net current assets of the business therefore increased
to £2.85 million from £1.71 million in 2018. Forecasts have been underpinned by Q1 2020 revenues of
£2.45 million (2019 Q1: £1.60m).
The COVID-19 crises has so far had little impact on the Group with some minor cashflow and order delays
in certain territories with the main markets continuing generally as expected. The Group’s products and
markets are not negatively affected by the crises and on the contrary could strengthen as plastics are
integral in food and human protection.
Post balance sheet events
Following the year end, the Group has seen uncertainty that has come with the global outbreak of the
coronavirus, albeit the pandemic has so far had little negative impact on the Group. As this uncertainty
emerged only after the year end, the Directors’ view is that any significant impacts or changes are
considered to be a non-adjusting event in relation to these accounts.
The Directors are, and will continue to monitor the impacts of the current coronavirus results on the Group
and Company, but as at the date of signing the accounts, do not believe there have been any significant
impacts that require disclosure.
- 21 -
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 26 June 2020. 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 22 May 2020.
M Laurier
Chief Executive
22 May 2020
- 22 -
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;
• Prepare the financial statements on the going concern basis unless it is inappropriate to
presume that the Group will continue in business;
• 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.
Each of the active 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.
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 22 May 2020.
N Clavel
Interim Chairman
22 May 2020
- 23 -
Audit Committee Report
Dear Shareholder
As the Chairman of Symphony’s Audit Committee, I present my Audit Committee Report for the year
ended 31 December 2019, 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. In
future, and in accordance with current guidance, taxation services will be obtained from firms independent
to the Company’s auditor.
Accordingly, the Committee recommended to the Board that Mazars LLP be re-appointed for the next
financial year.
During 2019, 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.
•
•
•
In addition to the Committee’s ongoing duties, the Committee has and will continue to:
•
•
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 2019
IFRS 16 “Leases”
The Committee considered the impact of IFRS 16 “Leases” which was adopted for the first time from 1
January 2019. The impact of IFRS 16 was significant to certain balance sheet disclosures but not to the
Group’s reported loss for the period.
Revenue recognition and cut-off
The Committee considered revenue recognition and in particular the revenue cut-off over the year-end
and was satisfied that IFRS 15 was correctly applied.
Audit Committee effectiveness
The Committee reviews its effectiveness on an ongoing basis.
Nicolas Clavel
Chairman of the Audit Committee
22 May 2020
- 24 -
Remuneration Committee Report
Dear Shareholder
As the Chairman of Symphony’s Remuneration Committee, I present my Remuneration Committee Report
for the year ended 31 December 2019, 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 2019 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.
• 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
N Clavel, S Robinson and R 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 2019
No annual bonuses are payable for the year ended 31 December 2019 (2018: £nil).
As announced by RNS on 20 November 2019, extensions were granted to the exercise period of certain
options. The Company had previously granted options to purchase 8,441,500 ordinary shares of 1p each
in the Company (“Ordinary Shares”) to certain directors of the Company (the “Options”). The Options
were due to expire across 2019 and 2020.
R Wigley and S Robinson, as non-executive directors of the Company, commissioned an independent
remuneration report on the impact of extending or not extending the Options. The report concluded that
it was in the best interests of all shareholders that the exercise period of the Options be extended.
Consequently, R Wigley and S Robinson recommended to the Board, who agreed, that the expiry dates
of the Options be extended by 12 or 24 months, and in addition, the exercise price of Options to purchase
1,090,000 Ordinary Shares was also increased to 12.5 pence per Ordinary Share.
The options affected are indicated in the share options and warrants table on page 26.
Remuneration Committee effectiveness
The Committee reviews its effectiveness on an ongoing basis.
- 25 -
Directors’ emoluments
The table below sets out the total emoluments received by each Director who served during the year
ended 31 December 2019.
N Deva*
M Laurier
I Bristow
M Stephen
N Clavel
S Robinson
R Wigley
2019
2018
Basic
salary
£’000
Benefits
£’000
Total
Emoluments
£’000
Total
Emoluments
£’000
14
201
137
137
16
16
16
537
-
10
4
12
-
-
-
26
14
211
141
149
16
16
16
563
16
213
144
152
16
16
20
577
The Company has taken out insurance for its officers against liabilities in relation to the Company under
Section 233 of the Companies Act 2006.
*N Deva resigned on 7 November 2019.
Share options and warrants
The Directors have share options and warrants, or interests in share options and warrants as follows:
Number of
share
options or
Exercise price
warrants
(pence per share) Exercisable from
Exercisable to
31 March 2010
M Laurier
M Laurier
I Bristow
I Bristow
M Stephen
M Stephen
N Clavel
N Clavel
S Robinson
R Wigley
R Wigley
The above share options and warrants are HM Revenue and Customs unapproved.
26 November 2008 26 November 2021
30 March 2022
26 November 2008 26 November 2021
30 March 2022
26 November 2008 26 November 2020
30 March 2021
16 October 2009 26 November 2021
18 December 2010 18 December 2021
19 November 2019 19 November 2021
6 April 2021
19 November 2019 19 November 2021
1,851,500
350,000
3,000,000
280,000
2,000,000
210,000
500,000
250,000
1,500,000
750,000
250,000
4.500
12.500
4.500
12.500
4.500
12.500
4.500
12.500
12.500
12.500
12.500
31 March 2010
31 March 2010
15 May 2019
In addition to amendments to certain options detailed on page 25, and also as announced by RNS on 20
November 2019, the exercise price of options previously granted to R Wigley in 2018 was reduced to
12.5 pence per Ordinary Share. In addition, options were granted to purchase 1,500,000 Ordinary Shares
at an exercise price of 12.5 pence per Ordinary Share to S Robinson and to purchase 250,000 Ordinary
Shares at an exercise price of 12.5 pence per Ordinary Share to R Wigley.
S Robinson
Chairman of the Remuneration Committee
22 May 2020
- 26 -
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 2019 which comprise the
Consolidated Statement of Comprehensive Income, 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 the preparation of the group financial statements is applicable law and International
Financial Reporting Standards (IFRSs) and, as regard to the parent company financial statements, as
applied in accordance with applicable law and United Kingdom Accounting Standards, including FRS 101
“Reduced Disclosure Framework” (United Kingdom Generally Accepted Accounting Practice).
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 31st December 2019 and of the group’s loss 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
United Kingdom Generally Accepted Accounting Practice; 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
group and 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 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.
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 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.
We summarise below the key audit matters in forming our audit opinion above, together with an overview
of the principal audit procedures performed to address each matter and, where relevant, key observations
arising from those procedures.
These matters, together with our findings, were communicated to those charged
with governance through our Audit Completion Report.
- 27 -
Revenue recognition
Description of the Key Audit Matter
The risk of fraud in revenue recognition is an ISA presumption and unless rebutted must be
considered as a significant risk on all audits. For Symphony Environmental Technologies plc the
revenues of the business are the primary focus of users of the financial statements, hence
appropriate revenue recognition is considered to be a Key Audit Matter with a particular focus on the
risk of incorrect application of year end cut off.
How we addressed this matter
We addressed this risk by performing audit procedures which included, but were not limited to:
•
Performing analytical procedures, enquiry of management, and corroboration of
explanations provided.
• Obtaining and reviewing the revenue recognition policy to ensure they comply with the IFRS
•
requirements.
Substantive sampling of revenue reported in the two weeks pre and post year end. We
assessed the right to and timing of revenue by reference to shipment or delivery
documentation depending on the specific contractual terms.
Audit conclusion
On the basis of our audit procedures, we have not identified any misstatements in relation to revenue
recognised in the financial statements.
Valuation of Right of Use Assets and Liabilities
Description of the Key Audit Matter
The valuation of right of use assets and related liabilities on the adoption of IFRS 16 involves the
application of management judgement, particularly in respect of the discount rate applied in
calculations and the assessment of the impact of key lease terms. There is a risk that inappropriate
judgement may lead to a material misstatement in the valuation. In addition, as this is the first year of
implementation of IFRS 16, there is a risk that the disclosures are not as required by the standard.
How we addressed this matter
We addressed this risk by performing audit procedures that included but were not limited to:
• Reviewing the IFRS 16 judgements made by management for reasonableness.
• Challenging the judgements applied to the discount rate selection by way of understanding
•
the client’s basis and source of evidence for them.
Performing sensitivity analysis on the rates to challenge the extent of fluctuation which could
lead to material misstatement.
Agreeing key elements of lease terms to lease agreement documentation.
•
• Created expectation of figures by recalculating based on the lease agreement terms
• Reviewing the disclosures in the financial statements
Audit conclusion
On the basis of our audit procedures, we have not identified any misstatements (including disclosure
deficiencies) in the IFRS 16 valuation of right of use assets and liabilities as a result of the adoption
of the standard in the financial statements.
Impact of COVID-19 on the financial statements
Description of Key Audit Matter
Since the balance sheet date there has been a global pandemic from the outbreak of COVID-19. The
potential impact of COVID-19 became significant in March 2020 and is causing widespread disruption
to normal patterns of business activity across the world, including the UK. As the group trades
internationally, the risk extends beyond the UK impact.
- 28 -
The directors’ consideration of the impact on the financial statements are disclosed in Chief
Executive’s Review on page 6 and going concern assessment on page 21 . Whilst the situation is still
evolving, based on the information available at this point in time, the directors have assessed the
impact of COVID-19 on the business and have concluded that adopting the going concern basis of
preparation is appropriate.
As per Note 23 to the financial statements, the directors have also concluded that COVID-19 is a non-
adjusting post balance sheet event.
How we addressed this matter
We assessed the directors’ conclusion that the matter be treated as a non-adjusting post balance sheet
event and that adopting the going concern basis for preparation of the financial statements is
appropriate. We considered:
•
The timing of the development of the outbreak across the world and in the UK and in key
countries for the group’s suppliers and customers; and
• How the financial statements and business operations of the group might be impacted by the
disruption.
In forming our conclusions over going concern, we evaluated how the directors’ going concern
assessment considered the impacts arising from COVID-19 as follows:
• We reviewed the directors’ going concern assessment including COVID-19 implications based
on a ‘most likely’ (base case) scenario and a ‘reverse stress tested scenario’ as approved by
the board of directors on 21 May 2020. We made enquiries of directors to understand the
period of assessment considered by directors, the completeness of the adjustments taken into
account and implication of those when assessing the ‘most likely’ scenario and the ‘reverse
stress tested scenario’ on the group’s future financial performance;
• We evaluated the key assumptions in the ‘base case’ forecast and the ‘reverse stress tested
scenario’ forecast and considered whether these appeared reasonable;
• We examined the minimum cash headroom under the ‘base case’ monthly cash flow forecasts
as disclosed in the financial statements and evaluated whether the directors’ conclusion that
liquidity headroom remained in all events was reasonable; and
• We evaluated the adequacy and appropriateness of the directors’ disclosure in respect of
COVID-19 implications, in particular disclosures within principal risks & uncertainties, post
balance sheet events and going concern.
Audit conclusion
Based on the work performed, we are satisfied that the matter has been appropriately reflected in the
financial statements. Our conclusions on going concern are set out in the section headed
“Conclusions relating to going concern” above.
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
How we determined it
Group - £164,500
Parent company - £82,250
Group – 2% revenue
Parent company– 5% net assets (capped at above due to
group audit limits)
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
- 29 -
Performance materiality
Reporting threshold
shareholders as the group is still at an early stage of profit
generation.
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.
Performance materiality is set to reduce to an appropriately low
level the probability that the aggregate of uncorrected and
undetected misstatements in the financial statements exceeds
materiality for the financial statements as a whole. The level of
performance materiality applied is as follows:
Group - £131,600
Parent company- £65,800
The reporting threshold is the materiality level below which
audit differences would not be communicated those charged
with governance. We agreed with the Board that we would
report to them misstatements identified during our audit above
the clearly trivial threshold as well as misstatements below that
amount that, in our view, warranted reporting for qualitative
reasons. The clearly trivial levels for the group are as follows:
Group - £4,950
Parent company- £2,450
The range of financial statement materiality across components, audited to the lower of local statutory
audit materiality and materiality capped for group audit purposes, was between £82,250 and £164,500
being all below group financial statement materiality.
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 parent
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 company 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.
- 30 -
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.
Other information
The directors are responsible for the other information. The other information comprises the information
included in the Annual Report and Accounts 2019, 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 23, 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.
- 31 -
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
The Pinnacle
160 Midsummer Boulevard
Milton Keynes
MK9 1FF
Date
- 32 -
Consolidated statement of comprehensive income
for the year ended 31 December 2019
Revenue
Cost of sales
Gross profit
Distribution costs
Administrative expenses
Operating (loss)/profit
Finance costs
(Loss)/profit for the year before tax
Taxation
(Loss)/profit for the year
Total comprehensive (loss)/income for
the year
Basic earnings per share
Diluted earnings per share
Note
2019
£’000
2018
£’000
4
8,225
8,802
(4,450)
(4,676)
3,775
(321)
4,126
(210)
(4,076)
(3,852)
5
7
8
9
9
(622)
(75)
(697)
37
(660)
(660)
(0.41)p
(0.41)p
64
(26)
38
10
48
48
0.03p
0.03p
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 2019
Company number 03676824
ASSETS
Non-current
Property, plant and equipment
Right-of-use assets
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
Non-current
Lease liabilities
Current
Lease liabilities
Borrowings
Trade and other payables
Total liabilities
Total equity and liabilities
Note
10
11
12
14
15
16
17
17
17
18
18
18
19
2019
£’000
218
637
42
897
882
2,335
1,161
4,378
5,275
1,700
2,077
(537)
2018
£’000
254
-
34
288
623
2,228
374
3,225
3,513
1,543
333
123
3,240
1,999
509
122
283
1,121
1,526
2,035
5,275
-
-
454
1,060
1,514
1,514
3,513
These annual report and accounts were approved by the Board of Directors on 22 May 2020 and
authorised for issue on 22 May 2020. 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 -
Consolidated statement of changes in equity
for the year ended 31 December 2019
Equity attributable to the equity holders of Symphony Environmental Technologies plc:
For the year to 31 December
2019
Balance at 1 January 2019
Issue of share capital
Transactions with owners
Total comprehensive income for
the year
Share
capital
£’000
Share
premium
£’000
Retained
earnings
£’000
Total
equity
£’000
1,543
157
157
-
333
1,744
1,744
123
-
-
-
(660)
1,999
1,901
1,901
(660)
Balance at 31 December 2019
1,700
2,077
(537)
3,240
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
1,516
27
-
27
-
Balance at 31 December 2018
1,543
-
333
-
333
-
333
67
-
8
8
48
1,583
360
8
368
48
123
1,999
The accompanying notes form an integral part of these annual report and accounts.
- 35 -
Consolidated cash flow statement
for the year ended 31 December 2019
Cash flows from operating activities
(Loss)/profit after tax
Adjustments for:
Depreciation
Amortisation
(Profit)/loss on disposal of tangible assets
Share-based payments
Foreign exchange
Interest expense
Tax credit
Changes in working capital:
Movement in inventories
Movement in trade and other receivables
Movement in trade and other payables
Net cash used in operations
R&D tax credit
Net cash used 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 investing activities
Cash flows from financing activities
Movement in working capital facility
Repayment of lease capital
Proceeds from share issue
Lease interest paid
Bank and invoice finance interest paid
Net cash generated in financing activities
Net change in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
Represented by:
Cash and cash equivalents (note 16)
Bank overdraft (note 18)
2019
£’000
(660)
202
17
(17)
-
42
75
(37)
(259)
(164)
76
(725)
37
(688)
(50)
(25)
27
(48)
(454)
(132)
1,901
(32)
(43)
1,240
504
374
878
1,161
(283)
878
2018
£’000
48
81
16
1
8
(8)
26
(10)
(55)
(1,223)
111
(1,005)
10
(995)
(45)
(3)
-
(48)
454
(2)
360
-
(26)
786
(257)
631
374
374
-
374
The accompanying notes form an integral part of these annual report and accounts.
- 36 -
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.
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’ further in this note.
Consolidation
This consolidated annual report and accounts are made up to 31 December 2019.
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 operating loss for the year of £0.62 million was more than mitigated by the £1.9 million
share subscription received during the year. The net current assets of the business therefore increased
to £2.85 million from £1.71 million in 2018. Forecasts have been underpinned by Q1 2020 revenues of
£2.45 million (2019 Q1: £1.60m).
The COVID-19 crises has so far had little impact on the Group with some minor cashflow and order delays
in certain territories with the main markets continuing generally as expected. The Group’s products and
markets are not negatively affected by the crises and on the contrary could strengthen as plastics are
integral in food and human protection.
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.
- 37 -
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;
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;
the Group has the ability to use or sell the intangible asset; and
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.
- 38 -
- 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 asset 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.
The residual value and useful economic lives are reconsidered annually.
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.
Leased assets
Under IFRS 16, for any new contracts entered into on or after 1 January 2019, the Group considers
whether a contract is, or contains a lease. A lease is defined as ‘a contract, or part of a contract, that
conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration’.
To apply this definition three key evaluations are assessed:
• whether the contract contains an identified asset, which is either explicitly identified in the
contract or implicitly specified by being identified at the time the asset is made available to the
Group
• whether the Group has the right to obtain substantially all of the economic benefits from use of
the identified asset throughout the period of use, considering its rights within the defined scope
of the contract
• whether the Group has the right to direct the use of the identified asset throughout the period of
use. The Group assess whether it has the right to direct ‘how and for what purpose’ the asset is
used throughout the period of use.
A right-of-use asset and a lease liability is recognised on the balance sheet at the lease commencement
date. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease
liability, any initial direct costs incurred, an estimate of any costs to dismantle and remove the asset at the
end of the lease, and any lease payments made in advance of the lease commencement date (net of any
incentives received).
Right-of-use assets are depreciated on a straight-line basis from the lease commencement date to the
earlier of the end of the useful life of the right-of-use asset or the end of the lease term. Impairment is
assessed when such indicators exist.
The lease liability is measured on commencement of the lease at the present value of the lease payments
unpaid at that date, discounted using the Group’s incremental borrowing rate.
Lease payments included in the measurement of the lease liability are made up of fixed payments included
in the lease agreement and together with any in-substance fixed payments.
- 39 -
Subsequent to initial measurement, the liability will be reduced for payments made and increased for
interest. It is remeasured to reflect any reassessment or modification, or if there are changes in in-
substance fixed payments.
When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset,
or profit and loss if the right-of-use asset is already reduced to zero.
The date of initial application by the Group of IFRS 16 was 1 January 2019. The Group used the modified
retrospective method and has therefore only recognised leases on the balance sheet as at 1 January
2019. In addition, the measurement of right-of-use assets has been calculated by reference to the lease
liability as at 1 January 2019 which ensured that there was no material impact to net assets as at that
date.
The value of recognised ‘right-of-use asset’ as at 1 January 2019 was £763,000. See notes 11 and 18.
The nature of the expenses related to those leases have also now changed from 1 January 2019 as IFRS
16 replaces the straight-line operating expense with a depreciation charge for right-of-use assets and
interest expense on lease liabilities. During the year ended 31 December 2019, IFRS 16 resulted in a
£37,000 increase in overall expenditure.
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.
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 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 presented in the income tax line
within statement of comprehensive income.
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
- 40 -
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 measured 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 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.
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
- 41 -
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. 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
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 16 ‘Leases’
IFRS 16 which requires lessees to account for leases ‘on-balance sheet’ by recognising a ‘right-of-use’
asset together with its respective lease liability was adopted on 1 January 2019.
Other new effective Standards and interpretations with no material impact to the Group
The following new and amended standards became effective during the current year and have not had a
material impact on the Group’s/Company’s financial statements:
• 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 2015-2018 Cycle (IFRS 3 Business Combinations and IFRS
joint Arrangements, IAS 12 Income Taxes, and IAS 23 Borrowing Costs) (effective 1 January
2019)
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.
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.
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.
- 42 -
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 costs
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.
- 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.
- 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 15. 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.
- 43 -
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
2019
£’000
315
930
3,254
2,480
1,246
2018
£’000
417
1,281
3,414
2,472
1,218
8,225
8,802
Revenues attributable to the above geographical areas are made on the basis of final destination of the
customer to which the goods are sold. All revenue is of the same nature, timing and uncertainty and so
the Directors have not provided a further disaggregation of the revenue beyond the segmental analysis
provided above. Returns are credited to revenue on receipt of the original goods if returned. Credits are
also made to revenue on agreement of a dispute where goods are not returned. Payments are made by
customers either before or after satisfaction of performance obligations depending on the credit risk
associated with customer. Payments made before satisfaction of performance obligations are disclosed
as a liability in accounts payable in the financial statements. If the satisfaction of performance obligation
is made before payment, then the value is included in accounts receivable until extinguished by the
payment. Significant judgements are made in the timing of performance obligations.
Non-current assets of £20,000 are held outside of the UK (2018: £20,000).
Major customers
There was one customer that accounted for greater than 10% of total Group revenues for 2019 (2018:
one customer). In 2019 one customer accounted for £2,222,000 or 27% (2018: £2,235,000 or 25%) of
total group revenues. The Group promotes it products through a global network of distributors and aims
to generate revenues from as many sources as practicable.
5
Operating (loss)/profit
The operating (loss)/ profit is stated after charging:
Depreciation – property,plant and equipment
Depreciation – right-of-use assets
Amortisation
(Profit)/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
- 44 -
2019
£’000
2018
£’000
76
126
17
(17)
627
-
-
11
15
5
6
67
81
-
16
1
664
114
12
11
15
11
9
30
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
2019
£’000
1,606
178
-
69
2018
£’000
1,530
210
8
65
1,853
1,813
2019
2018
9
6
10
7
3
35
9
6
10
7
2
34
2019
£’000
563
563
2018
£’000
577
577
2019
£’000
2018
£’000
563
-
563
569
8
577
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
Lease interest (right-of-use assets)
Total finance costs
Net finance costs
- 45 -
2019
£’000
2018
£’000
43
32
75
75
26
-
26
26
8
Taxation
R&D tax credit
Total income tax credit
No tax arises on the (loss)/profit for the year.
2019
£’000
2018
£’000
37
37
10
10
The tax assessed for the year is different from the standard rate of corporation tax in the UK of 19% (2018:
19%).The differences are explained as follows:
(Loss)/profit for the year before tax
Tax calculated by rate of tax on the result
Effective rate for year at 19% (2018: 19%)
Expenses not deductible for tax purposes
Expenses not taxable
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
2019
£’000
(697)
(132)
3
(24)
24
(49)
-
69
-
109
(37)
(37)
2018
£’000
38
7
13
-
3
(58)
(6)
3
1
37
(10)
(10)
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 £37,000 shown above relates to a repayment made by
HMRC in relation to the year ended 31 December 2018 (£10,000 relates to the year ended 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 2019 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 £16,515,000
(2018: £16,152,000). These tax losses have no expiry date. The unrecognised deferred tax asset in
respect of these losses based on latest profit projections is approximately £2,807,000 (2018: £2,745,000).
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.
- 46 -
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.
The Group also has gross fixed assets of £110,000 (2018: £104,000) which give rise to a deferred tax
liability of £30,000 (2018: £18,000). Other gross temporary timing differences of £27,000 (2018: £37,000)
give rise to a deferred tax asset of £5,000 (2018: £6,000). The net deferred tax liability of £22,000 (2018:
£11,000) 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 (loss)/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
(Loss)/profit attributable to equity holders of the
Company
Weighted average number of ordinary shares in
issue
2019
2018
£(660,000)
£48,000
160,085,762
152,877,898
Basic earnings per share
(0.41) pence
0.03 pence
Dilutive effect of weighted average options and
warrants
Total of weighted average shares together with
dilutive effect of weighted options- see below
5,338,811
9,585,716
160,085,762
162,463,614
Diluted earnings per share
(0.41) pence
0.03 pence
No dividends were paid for the year ended 31 December 2019 (2018: £nil).
The effect of options and warrants for the year ended 31 December 2019 are anti-dilutive.
A total of 24,826,500 options and warrants were outstanding at the end of the year which may become
dilutive in future years.
- 47 -
10
Property, plant and equipment
Year ended 31 December
2019
Plant &
Machinery
£’000
Fixtures &
Fittings
£’000
Motor
Vehicles
£’000
Office
Equipment
£’000
Total
£’000
Cost
At 1 January 2019
Additions
Disposals
At 31 December 2019
Depreciation
At 1 January 2019
Charge for the Year
Disposals
At 31 December 2019
Net Book Value
At 31 December 2019
At 31 December 2018
430
27
(13)
444
285
31
(3)
313
131
145
296
-
-
296
223
30
-
253
43
73
31
-
-
31
24
2
-
26
5
7
91
23
-
114
62
13
-
75
39
29
848
50
(13)
885
594
76
(3)
667
218
254
Year ended 31 December
2018
Plant &
Machinery
£’000
Fixtures &
Fittings
£’000
Motor
Vehicles
£’000
Office
Equipment
£’000
Total
£’000
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
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
- 48 -
11
Right-of-use assets
Year ended 31 December
2019
Cost
At 1 January 2019
Additions
At 31 December 2019
Depreciation
At 1 January 2019
Charge for the Year
At 31 December 2019
Net Book Value
At 31 December 2019
At 31 December 2018
Land &
buildings
£’000
Office
Equipment
£’000
Total
£’000
-
707
707
-
112
112
595
-
-
56
56
-
14
14
42
-
-
763
763
-
126
126
637
-
Right-of-use assets are assets used by the business under operating lease agreements and accounted
for under IFRS 16. The resultant lease liability is included in borrowings. See note 18.
- 49 -
12
Intangible assets
Year ended 31 December
2019
Development
costs
£’000
Cost
At 1 January 2019
Additions
At 31 December 2019
Amortisation
At 1 January 2019
Charge for the Year
At 31 December 2019
Impairment
At 1 January 2019
At 31 December 2019
Net Book Value
At 31 December 2019
At 31 December 2018
1,973
-
1,973
222
12
234
1,728
1,728
11
23
Trademarks
£’000
76
25
101
20
5
25
45
45
31
11
Total
£’000
2,049
25
2,074
242
17
259
1,773
1,773
42
34
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 £11,000 (2018: £23,000) have one year of amortisation remaining as at
31 December 2019 (2018: two years).
Year ended 31 December
2018
Development
costs
£’000
Trademarks
£’000
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
85
3
(12)
76
27
5
(12)
20
45
45
11
13
1,973
-
-
1,973
211
11
-
222
1,728
1,728
23
34
- 50 -
Total
£’000
2,058
3
(12)
2,049
238
16
(12)
242
1,773
1,773
34
47
13
Subsidiary undertakings
Name
Country of
incorporation
Nature of business
Symphony Environmental
Limited
England and
Wales
D2W Limited
Symphony Recycling
Technologies Limited
Symphony Energy Limited England and
England and
Wales
England and
Wales
Development and
supply of
environmental plastic
additives and products
Dormant
Dormant
Dormant
Proportion
of ordinary
shares held
by parent
Proportion
of ordinary
shares held
by the
Group
100%
100%
0%
100%
100%
100%
100%
100%
Wales
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.
14
Inventories
Finished goods and goods for resale
Stock in transit
Raw materials
2019
£’000
539
42
301
882
2018
£’000
372
-
251
623
The cost of inventories recognised as an expense and included in ‘cost of sales’ amounted to £3,869,000
(2018: £3,997,000). There is a provision of £15,000 for the impairment of inventories (2018: £7,500).
There is no collateral on the above amounts.
15
Trade and other receivables
Trade receivables
Other receivables
VAT
Prepayments
2019
£’000
2,041
111
37
146
2018
£’000
1,978
38
58
154
2,335
2,228
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.
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.
- 51 -
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
0 - 30
£’000
31-60
£’000
61-90
£’000
91-120
£’000
>120
£’000
Total
Gross
£’000
ECL
£’000
Total
Net
£’000
31 December 2019
1,713
252
31 December 2018
1,871
66
72
39
-
-
25
2,062
(21)
2,041
27
2,003
(25)
1,978
16
Cash and cash equivalents
Cash at bank and in hand
Invoice finance facility surplus
2019
£’000
1,114
47
1,161
2018
£’000
374
-
374
The carrying amount of cash equivalents approximates to their fair values.
17
Equity
Group and Company
Group
Ordinary
shares
Number
154,344,377
15,681,900
-
Ordinary
shares
£’000
1,543
157
-
Share
premium
£’000
Retained
earnings
£’000
333
1,744
-
123
-
(660)
Total
£’000
1,999
1,901
(660)
At 1 January 2019
Issue of share capital
Loss for the year
At 31 December 2019
170,026,277
1,700
2,077
(537)
3,240
At 1 January 2018
Issue of share capital
Capital reduction
Profit for the year
151,614,377
2,730,000
-
-
1,516
27
-
-
At 31 December 2018
154,344,377
1,543
-
333
-
-
333
67
-
8
48
1,583
360
8
48
123
1,999
During the year the Company issued 15,681,900 Ordinary Shares (2018: 2,730,000 ordinary shares) for
a net consideration of £1,901,000 (2018: £360,000).
Share options and warrants
As at 31 December 2019 the Group maintained an approved share-based payment scheme for employee
compensation. 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 2019 there were
1,225,000 approved staff options outstanding. No approved staff options were issued in 2019.
- 52 -
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:
2019
Weighted
average
exercise
price
£
0.07
0.21
0.02
0.14
0.09
Number
14,351,500
11,750,000
(225,000)
(1,050,000)
24,826,500
Number
15,781,500
1,850,000
(2,730,000)
(550,000)
14,351,500
2018
Weighted
average
exercise
price
£
0.07
0.16
0.13
0.05
0.07
Outstanding at 1 January
Granted
Exercised
Lapsed
Outstanding at 31
December
The weighted average exercise price of options exercised in 2019 was 2p (2018: 13p).
The number of share options and warrants exercisable at 31 December 2019 was 24,826,500 (2018:
14,351,500). The weighted average exercise price of those shares exercisable was 9p (2018: 7p).
The weighted average option and warrant contractual life is six years (2018: seven years) and the range
of exercise prices is 4.5p to 25p (2018: 2.375p to 25p).
Directors
Directors' interests in shares and share incentives are contained in the Remuneration Committee Report
on page 26.
IFRS2 expense
The IFRS 2 share-based payment charge for the year is £nil (2018: £8,000).
For 2018, 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
Risk free rate
Expected volatility
Contractual life
6 April 2019
20.25p
20.25p
3.5%
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. Volatility was
based on the Company’s share price data over a previous 15 month period.
- 53 -
18
Borrowings
Non-current
Leases
Current
Bank overdraft
Other loans
Leases
Total
2019
£’000
509
283
-
122
405
914
2018
£’000
-
-
454
-
454
454
Other loans include relate to an amount due relating to the invoice financing facility totalling £nil (2018:
£454,000). The invoice finance facility was not utilised as at 31 December 2019. Interest is charged at
2.20% over HSBC Bank plc base rate per annum.
Bank overdrafts are offset against cash surplus’ with the net position having to remain above zero. The
above overdraft relates to US Dollars and kept for hedging purposes as at the year end. Interest is charged
on overdrafts at 5% above the host countries currency base rate.
The bank overdraft and invoice finance facility are secured by a fixed and floating charge over the Group’s
assets.
Leases – IFRS 16
IFRS 16 requires lessees to account for leases ‘on-balance sheet’ by recognising a ‘right-of-use’ asset
together with its respective lease liability. The date of initial application by the Group was 1 January 2019.
The Group used the modified retrospective method and has therefore only recognised leases on the
balance sheet as at 1 January 2019. In addition, the measurement of right-of-use assets has been
calculated by reference to the lease liability as at 1 January 2019 which ensured that there was no material
impact to net assets as at that date.
The value of recognised ‘right-of-use asset’ as at 1 January 2019 was £763,000.
Reconciliation of transition to IFRS 16
Operating lease commitments stated as at 31 December 2018 (Note 20 b)
Effect of discounting (at incremental borrowing rate as at 1 January 2019)
Lease liabilities as at 1 January 2019
Other costs on creation of right-of-use assets
Right-of-asset cost addition as at 1 January 2019 (note 11)
The Group’s leasing activities are detailed in the table below:
£’000
860
(112)
748
15
763
Right-of-use asset
Head office
Office equipment
Number of assets
leased
Remaining term
1
2
5 – 6 years
2 – 3 years
The weighted average discount rate on initial application was 4.3%.
None of the above leases has a remaining option extension, option to purchase or termination option.
Under the terms of the lease, the Head office rent is to be re-negotiated during 2020 with reference to
current market rentals.
- 54 -
The maturity of lease liabilities are as follows:
No later than one year
Later than one year and no later than five years
During the year the Group had no other leases other than those included above.
The following lease payments were made during the year:
Lease capital
Lease interest
Total cash outflows
Reconciliation of liabilities arising from financing activities
For the year ended 31 December 2019
2019
£’000
2018
£’000
122
509
631
-
-
-
2019
£’000
2018
£’000
132
32
164
-
-
-
Working capital facility
Bank overdraft
Leases
Issue of shares
1 January
2019
£’000
454
-
-
1,876
Cash flows
£’000
(454)
283
(117)
1,901
Non-cash
changes
£’000
-
-
748
-
31
December
2019
£’000
-
283
631
3,777
Total liabilities from financing activities
2,330
1,613
748
4,691
For the year ended 31 December 2018
Working capital facility
Movement in finance lease liability
Issue of shares
1 January
2018
£’000
-
2
1,516
Cash flows
£’000
454
(2)
360
Non-cash
changes
£’000
31
December
2018
£’000
-
-
-
454
-
1,876
Total liabilities from financing activities
1,518
812
-
2,330
- 55 -
19
Trade and other payables
Current
Financial liabilities measured at amortised cost:
Trade payables
Other payables
Social security and other taxes
Accruals
2019
£’000
2018
£’000
880
14
55
172
906
5
58
91
1,121
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 69 days (2018: 64 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.
20
Commitments and contingencies
a) Capital commitments
The Group had capital commitments totalling £nil at the end of the year (2018: £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
2019
£’000
2018
£’000
-
-
-
-
149
579
132
860
Under IFRS16, from 1 January 2019 operating lease commitments are included within leases in note 18.
c) Contingent liabilities
The Group had contingent liabilities totalling of £nil at the end of the year (2018: £nil).
21
Related party transactions
Included in other receivables is an amount of £nil (2018: £1,000) 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 £nil (2018: £1,000) is unsecured and
settlement will be in cash.
- 56 -
22 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
Bank overdraft
Other loans
Leases
Risk management
2019
£’000
2,041
124
1,161
3,326
880
14
172
283
-
631
2018
£’000
1,978
38
374
2,390
906
5
91
-
454
-
1,980
1,456
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 2019 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
Two to three years
Four to five years
Trade and
other
payables
and
accruals
£’000
Leases
Bank
overdraft
& other
loans
Total
£’000
£’000
£’000
1,066
-
-
-
-
-
1,066
20
10
30
61
240
270
631
283
-
-
-
-
-
283
1,369
10
30
61
240
270
1,980
- 57 -
The maturity of financial liabilities as at 31 December 2018 is summarised as follows:
Gross cash flows:
Zero to sixty days
Interest rate risk
Trade
and other
payables
and
accruals
£’000
1,002
1,002
Leases
(right-of-
use
assets)
Bank
overdraft
& other
loans
Total
£’000
£’000
£’000
-
-
454
454
1,456
1,456
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 2019 is summarised as follows:
Cash and cash equivalents
Trade receivables
Other debtors
Trade payables
Other payables
Leases
Other loans
Sensitivity: increase in interest rates of 5%
Sensitivity: decrease in interest rates of 1%
Fixed
£’000
Variable
£’000
-
-
-
-
-
-
(631)
-
(631)
1,161
-
-
1,161
-
-
-
(283)
878
44
(8)
Zero
£’000
-
2,041
124
2,165
(879)
(14)
-
-
1,272
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 Variable
£’000
£’000
-
-
-
-
-
-
-
-
374
-
-
374
-
-
(454)
(80)
(4)
1
Zero
£’000
-
1,978
38
2,016
(906)
(5)
-
1,105
Sensitivity shows the effect on equity and statement of comprehensive income.
Total
£’000
1,161
2,041
124
3,326
(879)
(14)
(631)
(283)
1,519
44
(8)
Total
£’000
374
1,978
38
2,390
(906)
(5)
(454)
1,025
(4)
1
- 58 -
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:
Currency
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
Euro
Euro
Euro
USD
USD
USD
Sterling
balance
2019
£’000
214
(75)
139
Currency
balance
2019
’000
241
(87)
€154
1,783
(311)
1,472
(16)
21
$2,304
$(401)
$1,903
(133)
163
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
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 2019 the Group had outstanding forward foreign currency contacts which all matured
within five months of the year end and committed the Group to selling US Dollars 1,250,000 and to receive
a fixed Sterling amount (2018: the Group had no outstanding forward contracts as at the year-end
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
2019 is profit £45,000 (2018: £nil).
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 receivables
Cash and cash equivalents
2019
£’000
2,041
124
1,161
3,326
2018
£’000
1,978
38
374
2,390
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 74% (2018: 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 15.
- 59 -
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 17 and interest bearing loans and borrowings as detailed in note 18.
The Company satisfies the Companies Act 2006 requirement to hold £50,000 issued share capital of
which at least 25% is paid up. See note 17.
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 2019 and 2018 were as follows:
Total borrowings
Cash and cash equivalents
Net (cash surplus)/debt
Total equity
Borrowings
Overall financing
Gearing ratio
2019
£’000
914
(1,161)
(247)
3,240
914
4,154
nil%
2018
£’000
454
(374)
80
1,999
80
2,079
4%
The gearing ratios are in line with the management’s working capital financing strategy.
23
Post balance sheet events
Following the year end, the Group has seen uncertainty that has come with the global outbreak of the
coronavirus, albeit the pandemic has so far had little negative impact on the Group. As this uncertainty
emerged only after the year end, the Directors’ view is that any significant impacts or changes are
considered to be a non-adjusting event in relation to these accounts.
The Directors are, and will continue to monitor the impacts of the current coronavirus results on the Group
and Company, but as at the date of signing the accounts, do not believe there have been any significant
impacts that require disclosure.
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’)
- 60 -
Company statement of financial position
at 31 December 2019
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
2019
£’000
-
1,150
1,150
3,801
738
4,539
66
4,473
5,623
1,700
2,077
1,846
5,623
2018
£’000
-
1,150
1,150
2,352
5
2,357
110
2,247
3,397
1,543
333
1,521
3,397
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 2019.
The profit after tax for the financial year 2019 within the annual report and accounts of the Company was
£325,000 (2018: £383,000).
These annual report and accounts were approved by the Directors on 22 May 2020 and are signed on
their behalf by:
I Bristow FCCA
Chief Financial Officer
The accompanying notes form an integral part of these annual report and accounts.
- 61 -
Company statement of changes in equity
for the year ended 31 December 2019
For the year to 31 December
2019
Balance at 1 January 2019
Issue of share capital
Transactions with owners
Total comprehensive income for
the year
Share
capital
£’000
Share
premium
£’000
Retained
earnings
£’000
Total
equity
£’000
1,543
333
1,521
3,397
157
157
-
1,744
1,744
-
-
1,901
1,901
-
325
325
Balance at 31 December 2019
1,700
2,077
1,846
5,623
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
1,516
27
-
27
-
Balance at 31 December 2018
1,543
-
333
-
333
-
333
1,130
2,646
-
8
8
383
360
8
368
383
1,521
3,397
The accompanying notes form an integral part of these annual report and accounts.
- 62 -
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.
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.
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).
New standards and interpretations have been issued but are not expected to have a material impact on
the Company's annual report and accounts.
Property, plant and equipment
Tangible fixed assets are stated at cost, net of depreciation and any provision for impairment.
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.
- 63 -
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 to be carried forward as well as other income tax credits to the Company are
assessed for recognition as deferred tax assets, insofar as the Company is entitled to UK tax credits on
qualifying research and development expenditure, such amounts are presented in the income tax line
within statement of comprehensive income.
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 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.
- 64 -
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.
- 65 -
Motor
vehicles
Total
£’000
£’000
14
14
14
-
14
-
-
14
14
14
-
14
-
-
Shares in
Group
Undertaking
Total
£’000
£’000
2,150
2,150
2,150
2,150
1,000
1,000
1,000
1,000
1,150
1,150
1,150
1,150
25 Property, plant and equipment
Cost
At 1 January 2019
At 31 December 2019
Depreciation
At 1 January 2019
Charge for the year
At 31 December 2019
Net book value
At 31 December 2019
At 31 December 2018
26
Investments
Cost
At 1 January 2019
At 31 December 2019
Impairment
At 1 January 2019
At 31 December 2019
Net book value
At 31 December 2019
At 31 December 2018
Group undertakings are detailed in note 13.
- 66 -
27
Trade and other receivables
Amounts owed by Group undertakings
VAT
Prepayments
2019
£’000
3,785
6
10
2018
£’000
2,331
12
9
3,801
2,352
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 (2018: £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.
28
Trade and other payables: amounts falling due within one year
Trade payables
Accruals
29
Contingent liabilities
2019
£’000
2018
£’000
21
45
66
69
41
110
The Company has guaranteed all monies due to its bankers by Symphony Environmental Limited. At 31
December 2019 the net indebtedness of this company amounted to £283,000 (2018: £454,000l). The
Company has guaranteed the lease rental payable by Symphony Environmental Limited in respect to the
Group’s head office in Borehamwood amounting to £26,000 as at 31 December 2019 (2018: £132,000).
30
Share capital
The Company’s share capital is detailed in note 17 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
2019
No.
4
2019
£’000
62
3
-
65
2018
No.
4
2018
£’000
60
10
8
78
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.
- 67 -
32
Post balance sheet events
Following the year end, the Company has seen uncertainty that has come with the global outbreak of the
coronavirus, albeit the pandemic has so far had little negative impact. As this uncertainty emerged only
after the year end, the Directors’ view is that any significant impacts or changes are considered to be a
non-adjusting event in relation to these accounts.
The Directors are, and will continue to monitor the impacts of the current coronavirus results on the
Company, but as at the date of signing the accounts, do not believe there have been any significant
impacts that require disclosure.
- 68 -