Symphony Environmental Technologies Plc
Annual Report 2023

Plain-text annual report

2023 AnnuAl RepoRt And Accounts symphony environmental technologies plc Symphony Environmental is a global pioneer in developing technology that renders conventional plastic biodegradable as well as a diverse range of technologies designed to safeguard plastic and rubber materials from microbes, insects, fire, and other hazards. our innovative solutions are distributed in nearly 100 countries worldwide contributing to environmental protection, food safety and human health and well-being. Contents Overview 2023 Highlights .................................................................................. 1 Symphony at a Glance ...................................................................... 2 Symphony’s Distribution Network ................................................. 4 Product Focus .................................................................................... 6 Strategic Report Chairman’s Statement .................................................................... 12 Chief Executive’s Review................................................................. 13 Corporate Social Responsibility ................................................... 16 Strategic Report ............................................................................... 17 Section 172 Report .......................................................................... 18 Principal Risks and Uncertainties ................................................ 19 Governance Board of Directors ........................................................................... 20 Chairman’s Corporate Governance Statement ......................... 22 Directors’ Report .............................................................................. 29 Directors’ Responsibilities Statement ......................................... 32 Audit Committee Report ................................................................ 33 Remuneration Committee Report ............................................... 34 Independent Auditor’s Report ....................................................... 36 Financial Statements Consolidated statement of comprehensive income ............... 43 Consolidated statement of financial position............................ 44 Consolidated statement of changes in equity........................... 45 Consolidated cash flow statement............................................... 46 Notes to the Annual Report and Accounts................................. 47 Company statement of financial position.................................. 71 Company statement of changes in equity.................................. 72 Notes to the Company statement of financial position........... 73 Company information .................................................................... 77 overview overview 1 2023 Highlights: Financial highlights: Group revenues Gross profit Reported loss before tax Basic loss per share Cash used in operations £6.35 million 2022 £6.15 million £2.33 million 2022 £2.28 million £2.25 million 2022 £3.01 million 1.18p 2022 1.65p £0.62 million 2022 £1.59 million Post year end o The conversion dates of the convertible loans with Sea Pearl Ventures Limited have been extended to 31 December 2025 with no other changes, including the Group’s rights to repay in whole or in part at any time or times until 30 days before the conversion date o On 22 March 2024 the Group raised £1.4 million of equity (before expenses) by way of a subscription and retail offer Symphony Environmental Technologies plc Annual Report and Accounts 20232 2 Symphony Environmental Technologies plc Annual Report and Accounts 2021 overview overview Symphony at a Glance Symphony at a Glance Global specialists in technologies that make plastic and rubber products smarter, safer and Global specialists in technologies that make plastic and rubber products smarter, safer and more sustainable. more sustainable. Established with £69m Sales since 2015 ESG Credentials High margin Underlying 41% gross margins Investing in £5.0m R & D investment technology A global market Strong partners Strong pipeline Multiple live opportunities globally High gross margin and High margin capital light High gross margin and capital light. Global network of Operationally geared. distributors and Global network of manufacturing bases distributors. 7% of revenue invested Investing in into research and technology development over the c.8% of revenue past 6 years invested into research and technology Approvals in place for since 2015. key technologies Emerging markets Blue chip have driven growth to global partners date. 22 countries have including Grupo adopted regulations Bimbo, Indorama mandating the use of Corporation and Rivulis. d2w type technologies Engaging with public Strong pipeline and private sector Engaging with public targets internationally, and private sector we have multiple targets international. customer trials Symphony has multiple customer underway trials underway. Listed on the London An established Stock Exchange since disruptor. 2001. Established in 1995 – ESG Awarded Awarded the LSE’s the LSE’s Green Green Economy Mark Economy mark for sustainability in for sustainability 2019 in 2019 Strong partners in key regions Our Solutions: Our Solutions: Biodegradable Technology Biodegradable Technology Perfect for single use plastics and packaging Perfect for single use plastics and packaging Lightweight plastic materials are used in many industries – not least the food industry where they are essential for protecting Lightweight plastic materials are used in many industries – not least the food industry where they are essential for protecting food from contamination and damage and reducing waste. However, 30% of plastic escapes into the environment annually food from contamination and damage and reducing waste. However, 30% of plastic escapes into the environment annually with with 8-10 million tonnes of plastic finding its way into in the oceans of the world, with dire consequences for people, wildlife, 8-10 million tonnes of plastic finding its way into in the oceans of the world, with dire consequences for people, wildlife, and water and water quality. quality. With over 20 years of solid scientific research and development behind it, our d2w masterbatch has been proven With over 20 years of solid scientific research and development behind it, our d2w masterbatch has been proven to biodegrade on land and in the marine environment, and is now sold around the world. to biodegrade on land and in the marine environment, and is now sold around the world. A mature technology which represents the majority of our current revenues. It is cost-effective and A mature technology which represents the majority of our current revenues. It is cost-effective and perfect for single use plastics and packaging, which account for around 40% of all plastic items perfect for single use plastics and packaging, which account for around 40% of all plastic items produced annually, and among the top ten items littered. It is also much kinder to the environment. produced annually, and among the top ten items littered. It is also much kinder to the environment. So, So, there is plenty of room for revenue growth. there is plenty of room for revenue growth. The lifecycle of plastic products enhanced with d2w biodegradable technology The lifecycle of plastic products enhanced with d2w biodegradable technology 1 2 3 4 R R Just 1% of d2w added to polymer Just 1% of d2w added to polymer during manufacture during manufacture Can be used for all the same Can be used for all the same purposes as regular plastic purposes as regular plastic Can be recycled with regular Can be recycled with regular plastic during product life plastic during product life If littered, products will If littered, products will biodegrade and be recycled biodegrade and be recycled back into nature by bacteria back into nature by bacteria and fungi on land or sea and fungi on land or sea Without leaving toxic residues or microplastics behind. Without leaving toxic residues or microplastics behind. Symphony Environmental Technologies plc Annual Report and Accounts 2023 Symphony Environmental Technologies plc Annual Report and Accounts 2021 overview overview Overview 3 3 Designed to Protect Designed to Protect d2p is the brand name for a suite of masterbatches offering extra protection to plastic and rubber products from bacteria, insects, fungi, algae, odour, d2p is the brand name for a suite of masterbatches offering extra protection fouling and fire. to plastic and rubber products from bacteria, insects, fungi, algae, odour, fouling and fire. The d2p range of products are relatively new compared to d2w. Over the last few years, we have conducted, along with our global partners, a significant number of tests and trials, resulting in several technologies maturing and ready to The d2p range of products are relatively new compared to d2w. Over the last few years, we have conducted, along with our commercialise including anti-insect, bread, gloves and flame retardants, obtaining regulatory approval where necessary. global partners, a significant number of tests and trials, resulting in several technologies maturing and ready to commercialise The Product Focus section of this report highlights a few of these key technologies and their applications. including anti-insect, bread, gloves and flame retardants, obtaining regulatory approval where necessary. The Product Focus section of this report highlights a few of these key technologies and their applications. We also continue to progress our newer technologies which we expect to commercialise over the short term. Additionally, there is a pipeline of products in development, which we hope to bring to fruition in the next few years. We also continue to progress our newer technologies which we expect to commercialise over the short term. Additionally, there is a pipeline of products in development, which we hope to bring to fruition in the next few years. A benefit-led additive suite of technologies that enhances plastics Problem Problem: Food spoilage and wastage Protecting food Hygiene and virus transmission Hygiene and Virus transmission Solution Solution • d2p FDA-approved antibacterial bread packaging • Ethylene and moisture adsorbers for packaging fruit, • FDA approved antibacterial bread packaging vegetables, and other food products. • Ethylene and moisture absorbers for packaging • Antimicrobial water pipes and tanks • d2p antimicrobial for water pipes and tanks • Antimicrobial gloves and other plastic surfaces. Flammable plastics Fire risk and emission of toxins • Flame retardant plastic masterbatches • d2p lame-retardant plastic masterbatches Electric cable, deterioration and damage Symphony Environmental Technologies plc Annual Report and Accounts 2023 Metal deterioration and damage • Rodent repellents • d2p corrosion-inhibitors Insect borne disease transmission and damage Insect-borne disease transmission • Anti-insect masterbatch • d2w nsecticide embedded in plastic surfaces Masterbatches offering cost-effective protection against bacterial and fungal contamination on plastic products and other surfaces. Insecticidal masterbatch used to control pests – applications include agriculture, horticulture, forestry, and home. Masterbatches to repel rodents from causing dangerous damage to plastic products such as cable insulation, food, and non-food packaging. Produced from a natural ore, d2p OS will remove oxygen from inside packaging to increase the shelf life of perishable goods. Flame retardants decrease the ignitability of materials and inhibit the combustion process limiting the amount of heat released. To protect surfaces against the corrosion and oxidation of ferrous and non-ferrous metals. Highly active adsorbent for the removal of ethylene gas and moisture in plastic packaging, to reduce spoilage of perishable fruit and vegetables. Inorganic masterbatches and additives designed to inhibit odours in plastic products. www.d2p.net www.d2p.net Symphony Environmental Technologies plc Annual Report and Accounts 2023Michael Laurier Chief ExecutiveTel: +44 (0)208 207 5900 Mobile: +44 (0)78 3135 0077Email: michael.laurier@d2w.netSymphony Environmental Ltd, 6 Elstree Gate, Elstree Way, Borehamwood, Hertfordshire WD6 1JD, United Kingdom4 Symphony Environmental Technologies plc Annual Report and Accounts 2023 Symphony’s Distribution Network symphony is an international company reaching every corner of the globe. We have a growing number of distributors, giving us a presence in nearly 100 countries worldwide. Below are just some of the products and places where d2w biodegradable and d2p protective technologies are adding value. R e B R i c a g s P l a y p it b alls P l a y p it b alls Dominican Republic R R a e B r d b a gs d b a gs a e B r Latin America/Turkey/ Dominican Republic overview overview 5 Israel Pakistan Pakistan China D rip tape D rip tape s s e e k in g water pip k in g water pip b rush h D r i n D r i n T o o t R R R M ulch fi lm M ulch fi lm s e ol s C o m f o s ole in South Korea R R g straws g straws D r i n k i n D r i n k i n R R r i e r b ags r i e r b ags C a r C a r R o u ches r p e W a t R s e sacks u f R e R o r a g e bags Foo d s t Colombia Brazil Ghana Middle East* Thailand NB-0002 Symphony Environmental Technologies plc Annual Report and Accounts 2023overview overview 6 Product Focus Making a Difference with d2p AI (Anti-insect) d2p AI (anti-insect) technology has been very successful in protecting flexible plastic irrigation-pipes and drip-tapes from damage caused by boring and chewing insects. Helping to save valuable water, but also time and money spent on repairs and replacements. outperforming traditional 8mm and 10mm drip tape. d2p AI can be added to regular polymer during the manufacturing process, and requires little or no change to processing methods. d2p AI can also protect against insects and the diseases spread by them by adding it to the following: o Agricultural film o Mosquito nets – LLIN o Polystyrene and other plastic ceilings o Plastic coated laminate floorings Protection lasts for the lifetime of the product. Symphony Environmental Technologies plc Annual Report and Accounts 2023 d2p AM (Antimicrobial) Safe, Affordable, Effective Polymers are susceptible to microbial attack which causes odours, staining and physical degradation. d2p AM is a masterbatch suitable for a wide range of food and non-food applications. It has been successfully used to inhibit the growth of bacteria on the surface of film in bread packaging after receiving approval from the FDA in the USA in 2021 and Health Canada shortly afterwards. d2p AM has an effective kill rate greater than 99.999% with no migration into the food and no changes to: • Clarity • Strength or print adhesion. • Texture, taste, colour or smell overview overview 7 d2p AM is also safe for repeated use products like chopping boards, food containers and conveyor belts and it can be incorporated into a wide variety of plastics and polymeric materials, e.g. insoles for trainers, ball pit balls in children’s play areas and disposable gloves for the food processing and healthcare industries. It can make surfaces lethal to dangerous microbes, including Coronavirus, making it perfect for plastic fittings in high -traffic areas and high touch points like handrails, door handles and light switches. It can also be incorporated into drinking water pipes to inhibit the build-up of biofilm. It will not affect the mechanical, optical or physical properties of the product and globally recognised test methods ensure peace of mind for our partners and customers. Crucially, the protection lasts for the lifetime of the product. Scan this QR code to see possible applications of d2p AM Symphony Environmental Technologies plc Annual Report and Accounts 2023overview overview 8 d2w Biodegradable Plastic Plastic is a fantastic invention because it is such a versatile material. There is nothing quite like it for protecting food and other goods from damage and contamination, and it has a better life-cycle assessment than most other packaging materials. See https://www.biodeg.org/subjects-of-interest/ life-cycle-assessments/ The downside of plastic is that if it does get into the environment, it can accumulate there for decades, and despite our best efforts there will always be some plastic that escapes collection. During the last few years, we have become increasingly aware of the problem caused microplastics which are now found in every environment, in the food chain and not surprisingly, the human body. Some of the microplastics found in the environment are coming from tyres and man-made fibres, and recycling can also be a source of microplastics, but most of the microplastics found in the environment are caused by the fragmentation of ordinary plastic when exposed to sunlight. Fragmentation will be accelerated by colorants in the plastic. See https://www. biodeg.org/subjects-of-interest/microplastics/ These fragments are very persistent because their molecular weight is too high for microbes to consume them, and can remain so for decades, but Symphony’s d2w technology converts plastics into biodegradable materials which are no longer plastics. d2w is added to regular plastic products at the manufacturing stage. There is no difference in the properties of the plastic product during its useful life, it is just as strong, flexible and waterproof and it can be recycled with regular plastic if collected. But if a product made with d2w does escape collection and ends up as litter on land or sea, it will degrade and biodegrade just like nature’s wastes. This self-destructing plastic technology has been extensively researched for many years. In 2021 the Environmental Protection Agency of the United States issued an important report, saying that the technology “could significantly reduce the persistence of plastic pollution without creating undesired by-products, and a research team at Tokyo University has confirmed the biodegradation of biodegradable plastics even in extreme deep-sea environments. These studies follow on from research by Queen Mary University London, and the Oxomar Project sponsored by the French Government, both of which confirmed biodegradability and non-toxicity. There are companies all over the world using d2w technology and some countries have legislated to make its use mandatory. It is a drop in technology costing little or nothing extra, so companies could easily switch to d2w right now. Not only would they be doing the right thing for the environment – they would also be improving their own ESG rating. The technology is simple, but the result is quite extraordinary. For a detailed explanation see https://www. symphonyenvironmental.com/why-biodegradable/ technology is simple, but the result is quite extraordinary. Symphony Environmental Technologies plc Annual Report and Accounts 2023overview overview 9 d2w Biodegradable Plastic Mulch films Did you know that d2w controlled-life plastic is used in the farming industry for mulch films? Mulch film is plastic sheeting used to cover the soil – it has many benefits - it can modify soil temperatures, limit weed growth, prevent moisture loss, and improve crop-yield. The challenge for farmers is what to do with the mulch films after use. Before d2w, farmers had to pay to have acres of contaminated plastic removed from their farms, but not any more. Films made with d2w can be programmed to remain intact as a cover for the growing crop for the period required by the farmer, and will then degrade and biodegrade in the soil, without leaving harmful residues behind. This offers an environmentally sustainable alternative to conventional polyethylene (PE) mulch films because they can be tilled into the soil after the harvest and will biodegrade to nothing more than CO2, water and humus. This saves the farmer time and money and saves the environment from plastic waste. Scan the QR code to see a short video Symphony Environmental Technologies plc Annual Report and Accounts 2023overview overview 10 Protecting against fire Fire-Retardant Masterbatches In most cases plastics propagate fire because they quickly convert to volatile combustible materials when exposed to heat. In many fields such as electrical engineering, transport, building construction etc, the use of polymers is restricted by their flammability, whatever benefits the material may bring. However, the versatility of plastic means that its role in building construction is constantly expanding and it is now used in coatings, paint, water, soil and waste pipes, cabling, insulation and even fire- sprinkler systems due to their cost-effectiveness, ease of installation and corrosion resistance. Symphony has done extensive research and development in this field. Our fire-retardant masterbatches can be added at manufacture and will significantly decrease the ignitability of the plastic product and inhibit the combustion process, thereby limiting the amount of heat and toxins released. The role of fire retardants is to increase the time for people to escape, and the time available to tackle the fire, by slowing down the polymer combustion, reducing smoke emissions and reducing the dripping of molten polymer. The use of flame retardants is driven by legislation, Symphony has paid close attention to the approval processes in product development and has achieved M1 Classification according to French standard NFP92-503 and American Standard NFP 701, and excellent results according to BS476-12 fr www.d2p.net Symphony Environmental Technologies plc Annual Report and Accounts 2023 overview overview 11 Introducing Joseph Lee polymer scientist and Founder and ceo of cps technologies Symphony distributor in South Korea since 2013 Joseph’s Professional Journey and Comfosole’s Success Joseph’s journey from polymer science graduate to the founder of a successful company, highlights his innovative approach and ability to identify and fill market needs. Comfosole’s success is a testament to the effective combination of advanced materials science, consumer- focused product development and a highly committed team, including his daughter Haena who joined the company in 2018 as market development executive for Symphony’s d2w and d2p antimicrobial technology. https://www.cpstech.net Amazon.com: Comfosole Comfort Amazon.com: Comfosole Performance Joseph graduated from Hanyang University in South Korea, majoring in polymer science. He began his early career in Busan as a Technical Engineer for Hyundai Motor Cars’ injection moulding applications, moving to the Head Office of LG Industries in Seoul as part of the planning and development team. He then held research and development roles between 1989– 2004, including five years at DuPont Korea and 12 years at DuPont Asia region. He served as CEO at Comtech/Sunshin Korea. Joseph founded CPS Technologies (CPST) in 2005, leveraging his experience in polymer science for product development. CPST focuses on masterbatch compounds for footwear foam applications, and sells BtoB in many countries including China, Vietnam, Indonesia, India, Turkey, Ukraine, Brazil and South Korea. In 2015 Joseph recognised a gap in the market for insoles with improved cushioning, durability and odour- control. This led him to develop “Comfosole” an insole aimed at direct consumer sales in the USA, Europe and South Korea. Already a distributor for Symphony’s d2w biodegradable plastic technology in South Korea, he was well positioned to innovate and when introduced to the d2p range of products including d2p antimicrobial technology later the same year, he began to explore how to incorporate this technology into his insole, aiming to enhance its features and market appeal. Comfosole was launched in 2017 and has several advantages over regular insoles. Comfosole insoles are 100% recyclable and non-toxic. Their closed-cell structure prevents sweat accumulation and d2p antimicrobial technology combats odour-causing bacteria, algae and fungi. Comfosole was initially launched in the domestic market, selling in South Korea and Thailand. There are two versions available – Comfosole Comfort designed for standing, walking, work and life in general and Comfosole Athletic, designed for high performance. Comfosole is now available to consumers through Amazon in the USA, Canada, and Mexico. It has been praised by customers including Danny Abshire a very well- known running coach with years of experience and expertise. He spoke very highly of Comfosole, saying that it provided comfy, soft cushioning and no odour through 500 km running. Symphony Environmental Technologies plc Annual Report and Accounts 2023 strategic Report 12 Chairman’s Statement As indicated in the highlights section above, I am pleased to report that the year ended 31 december 2023 showed a reversal of the negative financial trend with all reported indicators being positive. Revenue for the year slightly increased to £6.35 million (2022: £6.15 million), with a 25% reduction in the operating loss. One of the Group’s focuses was to reduce cost, without causing any drag on the sales initiative. This was achieved and continues into 2024. On 22 March 2024 the Group issued a Circular and a Notice of General Meeting, which provided information on a £1.4 million capital raise by way of a subscription and a business update that showed “progress and opportunities” in several areas of the business. I will not repeat the information contained in the above, other than to reconfirm that the opportunities are significant and that the Board remains confident that these can develop into material commercial sales in the short to medium term. N Clavel Chairman 6 June 2024 Symphony Environmental Technologies plc Annual Report and Accounts 2023strategic Report 13 Chief Executive’s Review As reported in the Chairman’s statement above, a recent business update was issued on 22 March 2024. d2w - progress and opportunities The update focused on the opportunities in our main markets, the Middle East and Latin America which represent the Group’s largest volume for d2w. Our business model targets several global markets, through 76 distributors. Entry into any of these markets can be rapid, as d2w technology does not disrupt the existing supply chain or products. It is an upgrade process that requires virtually no change to the manufacturing process, machinery or distribution. ESG compliance requirements and continual changes to legislation are encouraging customers to consider alternatives to ordinary plastics. I am pleased to report that sales of d2w products increased from £4.8 million in 2022 to £5.2 million in 2023. However, our distributors report via their market intelligence that the sales volumes should have been considerably higher. While we have regular customers buying our products, volumes will increase with the introduction of local enforcement policies which, at this time, are nearly non-existent and have been delayed in various markets. Specifically, Saudi Arabia had expected to complete a biodegradable technical evaluation process before 31 December 2023, with the view of more widely enforcing Phase 1 of the legislation which requires a range of products to be oxo-biodegradable and progressing to Phases 2 and 3 which include an even wider range of products. Yemen has also legislated to make oxo-biodegradable plastic compulsory, but implementation has been delayed by logistical issues, mainly caused by the intense political situation that disrupted product movements. The combined effect of these delays has pushed sales into the 2024 trading year. In Latin America the market opportunity is mainly driven by a growing demand for ESG compliance, with concerns that changes to legislation will force customers to substitute ordinary plastics for paper, compostable plastics or a biodegradable alternative. In some markets, certain plastic products have been banned and paper alternatives for drinking straws are an example of these continual changes make matters worse for the environment, and that the problem of plastic litter would be solved if d2w were more widely adopted. Globally we have seen increased activity indicating near-term, genuine interest in parts of Africa, such as Kenya, Ghana and South Africa, as well as in the Far East markets which include China, Vietnam, Thailand, Indonesia and South Korea. d2w - progress and opportunities The Group has continued to invest in strengthening its portfolio with a large range of d2p formulations which are being used and commercially trialled in many different applications. d2p anti insecticide in agricultural products A large proportion of current d2p revenues were generated from sales of d2p anti-insect technology (“d2p AI”), the majority of which being to Rivulis. They have incorporated d2p AI technology into their Eurodrip product ranges, sold under the trade name, Rivulis Defend. Symphony anticipates further adoption of its d2p AI technology for other applications and in other markets d2p and FDA approval for bread packaging Sales of d2p antimicrobial (“d2p AM”) for bread applications have grown slowly to date, with the technology currently being used in small volumes in specialised brands in Mexico and Peru. We expect these markets to steadily expand into more mainstream locations and brands, as well as into other parts of Latin America on completion of their commercial trials. Apart from the markets where Grupo Bimbo have exclusivity, our d2p AM technology is currently at different stages of development with a number of other customers. Some customers are in pre-commercial trials and others are at early stages of development. d2p flame retardant The d2p flame retardant range of technologies has trials being carried out in many different applications globally. Currently. the Middle Eastern construction market is a particularly active area, and recent reports indicate that we are near completion of an important certification process, which if successful should lead to significant sales in a very large market. Other technologies The Group has also developed other technologies including corrosion inhibitors for various metals, ethylene and moisture adsorbers for food packaging, as well as antimicrobials for pipes and tanks. Symphony Environmental Technologies plc Annual Report and Accounts 2023Chief Executive’s Review Continued Joint venture in India with Indorama Corporation - Symphony Environmental India Pvt Ltd (“Symphony India”) Symphony India is a joint venture company established in 2022 between Symphony and Indorama India Pvt. Limited, a wholly owned subsidiary of Indorama Corporation. Symphony India is owned 46.5% by Symphony Environmental Limited, 46.5% by Indorama and 7% by Mr. Arjun Aggarwal, an Indian citizen, who is its Managing Director. The Government of India has published guidelines to reduce plastic pollution. The product offered by Symphony India, falls within the standard IS 17899 T:2022 Assessment of Biodegradability of Plastics in Varied Conditions. If this standard is satisfied, the opportunities in India could be substantial. Symphony India has identified more than 500 prospective companies for which d2w could provide a material benefit. Active discussions are underway with the majority of these target customers have already been directly corresponded with, but the Board believe the prospects of Symphony India extend far beyond this initial 500 companies. A number of d2p trials are also ongoing in India including d2p AM for bread bags, of which one has completed successful small trials and is now conducting semi commercial trials, which could lead to full commercial orders during 2024. Trading results Group revenue was £6.35 million (2022: £6.15 million) and is analysed in the table below. d2w revenues increased in 2023, primarily due to the new Middle East factory while d2p revenues fell in 2023. This was of timing differences with late receipt of expected 2023 orders being received in early 2024. Finished product sales were in line with last year thanks to a reliable primary market in the UK. d2w masterbatch revenues d2p masterbatch revenues Finished products and sundry revenue Total revenues Gross profit Gross profit margin Distribution costs Percentage of revenues Contribution after distribution costs Percentage of revenues 2023 £’000 5,221 512 618 6,351 2,333 37% (203) 3% 2,130 34% 2022 £’000 4,768 793 593 6,154 2,280 37% (408) 7% 1,872 30% strategic Report 14 Gross profit margins were stable at 37% (2022: 37%). Gross profit increased slightly to £2.33 million from £2.28 million in 2022. Distribution costs reduced by 50% to £0.20 million (2022: £0.41 million) mainly due to the UAE market being supplied with locally made product and also shipping rates having generally softened since the end of Covid. The board decided to increase the inventory impairment provision profile. The resultant value was calculated based on net proceeds fairly achievable over the short to medium term and were based on specific items where saleability is in doubt, and the dates of the last movements of each stock item as an indicator to future value except for certain raw material items which are known to be required in the short term. The inventory provision was £235,000 (2022: £252,000 due to glove provisions which the Group no longer trade). Adding back this provision gives an underlying gross profit margin of 41% (2022: 41%) and contribution after distribution costs over revenues of 37% (2022: 35%). Administrative expenses reduced by £0.68 million to £4.12 million (2022: £4.80 million). Staff costs reduced by £0.22 million to £2.22 million. Further reductions were made in respect to professional fees and consultancy costs. Equity- settled share-based charges of £0.08 million were included in the year (2022: £0.12 million). One-off court costs in relation to the EU case of £0.18 million were incurred in 2023. The Group expensed R&D costs of £0.21 million in 2023 (2022: £0.51 million). In addition, there were intangible asset development cost additions of £0.25 million during the year in respect to the Group’s d2p bread technology (2022: £0.17 million). An R&D tax credit of £0.10 million (2022: £0.12 million) was received during 2023 relating to the previous period. A further R&D tax credit will be receivable in 2024 with respect to 2023. The share of loss in respect to the joint venture in India was £73,000 (2022: £nil). This loss was incurred while Symphony India was working on satisfying the standard in relation to biodegradable plastic, as descried above, as well as developing d2p opportunities. The reported operating loss was £1.99 million (2022: £2.93 million) and loss after tax of £2.18 million (2022: £2.89 million) with basic loss per share of 1.18 pence (2022: loss per share 1.65 pence). The Group self-hedges its US Dollar foreign exchange exposure by purchasing goods where possible in US Dollars and utilises, when deemed appropriate, bank forward currency contract agreements to minimise exchange risk. As at 31 December 2023, the Group had a net balance of US Dollar assets (US Dollar cash balances and receivables less overdrafts and payables) totalling $1.40 million (2022: $1.46 million). Symphony Environmental Technologies plc Annual Report and Accounts 2023strategic Report 15 Eranova As announced in October 2020, the Group made an investment representing 1.6% of the enlarged capital of Eranova SAS (at £130,000 including costs) as part of a €6.00 million pre-industrial plant project. The pilot plant was completed on schedule during October 2021 and was operational and processing small volume commercial orders during 2022 which continued into 2023. Eranova is in receipt of pledged government grants and loans to further expand the early-stage production facility in Marseille, France. They anticipate completing this process in 2024. They have finished products made using Eranova technology in the French retail sector and in particular listed in Casino, Carrefour, Intermarche and Franprix. In 2023 Eranova signed its first €2.10 million pre-production licencing agreement to build a facility in Indonesia and is currently producing trial materials. Symphony, as a strategic shareholder of Eranova has an agreement to market Eranova’s biobased green algae product derived from green algae. Our d2w and d2p technologies are fully compatible with Eranova’s biobased product and we expect this will become a major growth area for Symphony in the longer term. Current trading and outlook Good progress continues to be made on cost reductions and increasing sales. As previously indicated several product trials and regularity applications are still in process. Our expectations based on the current information is that we will start to see completion and commercial starts during H2 2024. We continue to rely on our network of 76 distributors (2022: 79) for managing their markets and hence are sustaining and creating many opportunities for the Group. The opportunities for Symphony are significant, and whilst taking considerably longer to convert than originally anticipated, a combination of more positive conversations, trials and other factors give the Board confidence that these can and will be converted in the short to medium term. In the meantime, with the lower cost structure and higher gross margins, the 2024 outlook shows a much more positive commercial position for the Group compared to recent years. M Laurier Chief Executive 6 June 2024 Chief Executive’s Review Continued Convertible Loan The Company has entered into two Convertible Loan Agreements (“CLAs”) entered into with Sea Pearl, who are also an existing 17.4% shareholder of the Company. Details announced to the market were: First CLA: 13 March 2023: £1.0 million facility - £1.0 million drawn down Second CLA: 18 October 2023: £1.0 million facility - £0.5 million drawn down On 13 March 2024, Sea Pearl and the Company announced extensions to the repayment date of the CLAs by 15 months to 31 December 2025. This substantially improves the working capital requirements and balance sheet profile of the Group Other key terms remain unchanged. The full terms are as follows: o CLAs total drawn principal: £1.5 million (unsecured) o If not repaid on or before 31 December 2025, conversion on that date o Conversion price: 80% of the volume-weighted average share price for the 3 months prior to 31 December 2025 o Interest: 7% per annum, payable as accrued on repayment and/or conversion o Repayment of the CLAs, in full or in part solely at Symphony’s discretion As at the date of this document, the Company has not drawn down the remaining £0.5 million of the second £1.0 million CLA facility. Following Sea Pearl’s investment of £0.5 million pursuant to the subscription inmarch 2024, the Board has confirmed to Sea Pearl that it will not draw down on this remaining £0.5 million under the CLA. Statement of financial position and cash flow The Group had net borrowings (excluding convertible loans and lease liabilities) of £0.58 million as at 31 December 2023 (2022: net borrowings (excluding convertible loans and lease liabilities) of £0.84 million). The Group used cash of £0.62 million from operations (2022: £1.59 million) primarily as a result of the loss incurred but mitigated by favourable movements in receivables. During the year the Group received £1.5 million from the issue of convertible loans, of which conversion has since the year end been extended from 30 September 2024 to 31 December 2025, and post year end raised £1.4 million of equity by subscription and retail offer. Symphony Environmental Technologies plc Annual Report and Accounts 2023 strategic Report 16 Corporate Social Responsibility We are committed to reducing energy requirements and waste, and meticulously monitor our energy consumption and waste generation. Additionally, we proactively work to prevent pollution and assist our customers in doing the same. these principles are deeply embedded in our business models and activities. Our focus is on supplying environmentally beneficial products, and our d2w prodegradant technology aligns perfectly with these principles. To minimize our carbon footprint, we have established production facilities in several global locations, reducing the transportation of products and raw materials. Beyond our business operations, we actively support the wider community by contributing to local and national charities. This year we supported Crisis at Christmas, the local food bank and supplied items for sale at a local jobs fair. We also create opportunities for young individuals, regularly hosting students completing work experience in our office and laboratory. Symphony Environmental Technologies plc Annual Report and Accounts 2023strategic Report 17 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 masterbatches, together with the development and supply of environmental plastic and rubber finished products to a global market. A review of the business is given in the Chairman’s Statement on page 12 together with the Chief Executive’s Review on pages 13 to 15. Future developments are summarised in the Current Trading and Outlook section of the Chief Executive’s Review on page 15. 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 Revenue (£’000) Gross profit margin (%) Number of distributors 2023 6,351 36.8% 76 2022 6,154 37% 79 Method of calculation Revenues for the Group The ratio of gross profit to sales Number of distribution agreements These are discussed within the Chairman’s Statement and Chief Executive’s Review. Research and development The Group invests in research and development expenditure and an amount of £210,000 (2022: £510,000) are included in the operating loss for the year. Development expenditure of £250,000 (2022: £168,000) has been incurred during the year as an addition to intangible fixed assets. See note 12. The Group makes claims under the Government’s R&D tax credit scheme. The Group received £97,000 in the year relating to the 2022 claim. A claim will be made for 2023. See note 8. Section 172 report The Section 172 Report is shown on page 18. Principal risks and uncertainties The Principal Risks and Uncertainties of the Group are shown on page 19. Approval The Strategic Report was approved on behalf of the Board on 6 June 2024. M Laurier Chief Executive 6 June 2024 Symphony Environmental Technologies plc Annual Report and Accounts 2023strategic Report 18 Section 172 Report this report 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. this report should be read in conjunction with the chairman’s statement on pages 12 and chief executive’s Review on pages 13 to 15. Shareholders The Board’s main duty is to promote the Company and Group for the benefit of shareholders and it 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 and has over many years developed its networks of customers and distributors, and extensive product offerings. The Board uses its regular meetings to oversee strategy implementation and challenge when necessary. The Company discusses its activities and plans with its corporate advisors and brokers who are able to review and advise considering the Company’s wider shareholder base. Regular communications are carried out with larger shareholders. Any communications received from shareholders are responded to in good time. Communities and the environment Symphony is built around sustainability and commitment to the environment and is constantly searching for ways to further protect the natural and human world. The Group’s suite of d2w and d2p 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 possible, reducing the transport carbon footprint. See below in respect to a new production facility in the Middle East. The Group and its associates are constantly engaged with governmental decision makers and associated organisations around the world in order to input on developing key packaging regulations. The Group is on the approved lists of many governmental regulatory authorities including SASO (Saudi Arabia) and ESMA (UAE). Employees 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. The Group also has heads of departments who are responsible for day to day management of staff, which ensures meeting agendas, change management and other topics include input from all of the Group’s staff. This also allows for effective dialogue and feedback between the executives and staff via the department heads. Staff training is actively encouraged and the Group is certified to ISO 9001 and ISO 14001. Distributors, customers and suppliers The Group operates an extensive distributor network with a number of distributors selling Symphony’s products for ten years or more. The Group works alongside its distributors in helping end-customers with their packaging solutions. The Group has dedicated teams managing the distribution network on a regional basis which allows for input from, and dialogue with, the Group’s distributors on areas that affect them. Meetings are also held regularly between the executives and the distributors. The Group uses a small number of dedicated suppliers and works with them on many areas of product development. The executives also meet with key suppliers from time to time. Key decisions made during the year During the year the Board made certain decisions relating to the operations of the Group and developments of its products. Two key decisions were: o The Group reduced operating costs where strategic product and market development had been achieved. This primarily affected employees with little effect on other stakeholders save for the shareholders in seeing a more efficient cost structure. Employees who left were not replaced and allowed for enhanced roles for the employees that remained; and o The Group focused on gaining regulatory approvals for products where those product sales were successful in other markets. In particular d2p AI, which is currently an ongoing process for two new major markets. This is to the benefit of shareholders, distributors, customers and suppliers by way of increases business potential with no negative impacts to other stakeholders. There is also a benefit to the environment by use of the product in saving on water, where used for the protection of irrigation drippers. Symphony Environmental Technologies plc Annual Report and Accounts 2023strategic Report 19 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. The risks are listed in order of risk weighting. Other than removing Covid, there have been no changes to the Group’s risk profile during the year. 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. 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. 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. The Group mitigates this risk with active public relations activities both in house and use of external resources. The Group mitigates this risk by having a large number of distributors globally who can concentrate on any competition issues within their market, and also by differentiating the Group and its products by branding and marketing activities. Operational Risk Commodity pricing and availability The Group uses commodity and speciality materials in the make-up of its products. There is a risk of price volatility and material availability. The Group mitigates this risk by using more than one supplier of its raw materials and continually researching separate supply alternatives for the materials used. Financial Risk Foreign exchange rate fluctuation The Group 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 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. Symphony Environmental Technologies plc Annual Report and Accounts 2023Governance 20 Board of Directors Michael Laurier Ian Bristow Michael Stephen Chief Executive Officer Chief Financial Officer Commercial Director & Deputy Chairman Appointed to the Board: 4 December 1998 Committee Membership: None Appointed to the Board: 4 December 1998 Committee Membership: None Appointed to the Board: 3 August 2007 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. Michael drives the strategies and main relationships of the Group. 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. Ian’s continued experience with Symphony, as an AIM listed company with the many financial and governance requirements that are required, continues to build as the Group develops. 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 and was Parliamentary Private Secretary at the Ministry of Agriculture. He has been 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. Michael is able to use his legal and political knowledge to assist in shaping the commercial structure of the Group’s many trading relationships as well as managing product and country regulatory issues. Symphony Environmental Technologies plc Annual Report and Accounts 2023Governance 21 Nicolas Clavel Michael Kayser Independent Non- Executive Director & Chairman Appointed to the Board: 16 October 2008 Independent Non-Executive Director Appointed to the Board: 2 January 2024 Committee Membership: Audit, Remuneration (Chairman) 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 Active Impact Fund DAC). Nicolas is Swiss and is based in London and Geneva. Nicolas brings high level commercial and financial analysis, especially in emerging markets where Symphony has many of its opportunities. Background and Experience: Michael is an experienced finance professional with more than 40 years’ experience across a variety of roles in both UK and with international organisations. During the last 10 years he has primarily provided non-executive director services to organisations including the Transport Research Foundation, Biome Technologies Plc, the Transport Systems Catapult and Stobart Group Limited. Prior to this, Michael also worked for Accenture, Guinness (worldwide Finance Director for its beer division), HSBC, Laporte plc (Finance Director), Lloyds Register (CFO and Chief Operating Officer), Royal Bank of Scotland (private equity) and Unilever. Michael brings to the board commercial and financial expertise gained from large and small quoted and unquoted businesses. Symphony Environmental Technologies plc Annual Report and Accounts 2023Governance 22 Chairman’s Corporate Governance Statement Dear Shareholder QCA Principles: As Chairman of the Board of Directors of Symphony Environmental Technologies plc (“Symphony”, the “Company”, or, together with the subsidiary companies, the “Group”), it is my responsibility to ensure that Symphony has both sound corporate governance and an effective Board. As Chairman, my responsibilities include leading the Board effectively, overseeing the Company’s corporate governance model, and ensuring that information flows freely between Executives and Non-Executives in a timely manner. It is the Board’s job to ensure that Symphony is managed for the long-term benefit of all shareholders, with effective and efficient decision-making. Corporate governance is an important part of that role, reducing risk and adding value to our business. Our role as a Board is to create the conditions in which a resilient and successful business can continue to grow. Annually we review and determine our strategy and business model and then continuously monitor how management is implementing those plans. We review performance to ensure those plans remain on track or else are modified to take account of unforeseen circumstances. The Directors of Symphony recognise the value of good corporate governance in every part of its business. As Symphony is an AIM listed company, it is required to 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 main changes affecting governance were in respect to changes in non-executive directors affecting the make-up of the Board and its committees. 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 as follows. 1. Establish a strategy and business model which promotes long-term value for shareholders The principal activity of the Group is the development and supply of environmental plastic additives and masterbatches, together with the development and supply of environmental plastic and rubber finished products to a global market. The Board has concluded that the Group’s strategy of driving sales of its d2w range of products through its network of distributors will deliver the highest medium and long-term value to its shareholders. In addition, the Board is focused on increasing revenues generated by its d2p (designed to protect) range of products and technologies. The Board intends to deliver shareholder returns through capital appreciation. Challenges to delivering strategy and long-term goals are governmental policy (both preventative and adoptive), market competition, foreign exchange risks and raw material price volatility and availability, all of which are outlined in Principle Risks and Uncertainties on page 19, as well as steps the Board takes to protect the Group, mitigate these risks and secure a long-term future for the Group. The Group’s strategy and principal risks had remained unchanged during the year. 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 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. Symphony Environmental Technologies plc Annual Report and Accounts 2023 Governance 23 Chairman’s Corporate Governance Statement Continued 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. 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. The Company was the winner of “ESG Company of the Year” at the 2021 Small Cap Awards for its outstanding global achievements in Environmental, Social and Governance. The Company is also a holder of the LSE Green Economy Mark. 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 page 19. 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. 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. Symphony Environmental Technologies plc Annual Report and Accounts 2023Governance 24 Chairman’s Corporate Governance Statement Continued 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 two Non- Executive Directors, Nicolas Clavel and Michael Kayser. Nicolas Clavel is the Company’s Chairman. Nicolas Clavel and Michael Kayser are each regarded as Independent Directors by the Board notwithstanding that Nicolas holds a small number of shares and they both hold options over Ordinary Shares. The Board considers that both Nicolas Clavel and Michael Kayser have demonstrated the utmost regard for independence, appropriately challenging the Board and maintaining high standards of corporate governance on the Board. Neither Nicolas Clavel nor Michael Kayser represents any shareholder on the Board and both have a background in finance within regulated industries. Accordingly, the Board believes that both Nicolas Clavel and Michael Kayser exercise independent judgement in all matters relating to the Group. 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 2023 is shown below. Director Position Michael Laurier Chief Executive Officer Ian Bristow Chief Financial Officer Michael Stephen Commercial Director & Deputy Chairman Nicholas Clavel Non-Executive Director & Interim Chairman Shaun Robinson Non-Executive Director (Resigned 3 July 2023) Robert Wigley Non-Executive Director (Resigned 11 August 2023) Alexander Brennan Non-Executive Director (Resigned 11 August 2023) Board Meetings attended in 2023 Audit Committee meetings Remuneration Committee meetings 5/5 5/5 5/5 5/5 2/2 2/2 2/2 – – – 2/2 1/2 – – – – – 1/1 1/1 – – Symphony Environmental Technologies plc Annual Report and Accounts 2023Governance 25 Chairman’s Corporate Governance Statement Continued In order to be efficient, the Directors meet formally and informally both in person or where this is not possible, by internet conference, 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 Board has considered other roles that each Non-Executive Director has outside of the Company and consider that they are able to devote such time as is necessary for the proper performance of their duties and attend all Board meetings, unless prior good reason is provided in advance. The Company has two Committees, an Audit Committee and a Remuneration Committee. The Committees have the necessary skills and knowledge to discharge their duties effectively. As with Board papers, Committee papers are drafted and circulated to members of the Committee with sufficient time before the 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 (see biographies on pages 20 to 21). 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. External advice is sought for material legal and regulatory matters when required. During the year external advice was sought in relation to a legal case taken against the European Union and US regulatory advice in respect to the Groups d2p technology for bread wrapping. 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 five Board members are currently male. If it is agreed to expand the Board, the Board will, subject to identifying suitable candidates, look to fill at least one of the vacancies with a female Director. If required, the Directors are entitled to take independent legal advice and if the Board is informed in advance, the cost of the advice will be reimbursed by the Company. In addition to their general Board responsibilities, Non-Executive Directors are encouraged to be involved in specific workshops or meetings, in line with their individual areas of expertise. The Board shall review annually the appropriateness and opportunity for continuing professional development, whether formal or informal. 7. Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement The structure of the Board is subject to continual review to ensure that it is appropriate for the Company. The Board currently runs a self-evaluation process on Board effectiveness. It is intended that the Board will create a more formal Board evaluation process in the future, which will focus more closely on defined objectives and targets for improving performance. In Board meetings/calls, the Directors discuss areas where they feel a change would be beneficial for the Group taking appropriate advice when required. The Company has not yet adopted a policy on succession planning, in particular with regard to the Company’s Chief Executive, Michael Laurier. The Chief Executive is however Symphony Environmental Technologies plc Annual Report and Accounts 2023Governance 26 Chairman’s Corporate Governance Statement Continued 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 their contribution is relevant and effective, that they are committed, and where relevant, they have maintained their independence. There were no formal evaluations undertaken during the year which saw a change in some of the non-executive team. 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 foremost 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. Symphony Environmental Technologies plc Annual Report and Accounts 2023Governance 27 Chairman’s Corporate Governance Statement Continued 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: o oversee the Group’s strategic objectives and policies; o review of performance and controls; o oversee all aspects of the Company’s finances; o decide on key business transactions; o manage risk; and o 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 33 which details work undertaken during the year. Committee members and attendance The Audit Committee currently comprises Michael Kayser (Chair) and Nicolas Clavel (previous Chair). With Michael Kayser joining the Board it was deemed appropriate for him to be the audit committee chair due to his extensive accounting and committee experience. The Board considers that Michael Kayser has sufficient relevant financial experience to chair the Audit Committee given that he has over 40 years’ experience as chief accountant and non- executive director in many listed and non-listed entities. 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: o to review the Group’s internal financial controls and risk management systems; o 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; o 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; o to review and monitor the external auditors’ independence and objectivity, taking into consideration relevant UK professional and regulatory requirements; o 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 o 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 34-35 which details work undertaken during the year. Committee members and attendance Symphony’s Remuneration Committee currently comprises Nicolas Clavel (Chair) and Michael Kayser. The Board considers that Nicolas Clavel has sufficient relevant experience to chair the Remuneration Committee, given that has been at Symphony for 15 years, most of which being on the remuneration committee. 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. Symphony Environmental Technologies plc Annual Report and Accounts 2023Governance 28 Chairman’s Corporate Governance Statement Continued 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 2023 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 Chairman 6 June 2024 Objectives and responsibilities The Remuneration Committee’s main responsibilities can be summarised as follows: o 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; o To determine such remuneration policy, taking into account all factors which it deems necessary (including relevant legal and regulatory requirements); o To review the ongoing appropriateness and relevance of the remuneration policy, including policy comparisons with market competitors; o 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; o To review the design of, and any changes to, all share incentive plans; o To advise on any major changes in employee benefits structures throughout the Company or Group; and o 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 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. Symphony Environmental Technologies plc Annual Report and Accounts 2023Directors’ Report The Directors present their report and the audited annual report and accounts of the Group for the year ended 31 December 2023. 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 masterbatches, together with the development and supply of environmental plastic and rubber finished products to a global market. Review of business and future developments The Strategic Report on page 17 provides a review of the business, the Group’s trading for the year ended 31 December 2023, key performance indicators, and an indication of future prospects and developments. Page 19 presents the principal risks and uncertainties facing the business. 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 £2,180,000 (2022: loss £2,887,000). The Directors do not recommend the payment of a dividend (2022: £nil). The results for the year ended 31 December 2023 are set out in the consolidated statement of comprehensive income on page 43. Governance 29 Directors The Directors who served during the year ended 31 December 2023 and up to the date of signing the financial statements were as follows: N Clavel – Non-Executive Director & Chairman M Laurier – Chief Executive Officer I Bristow FCCA – Chief Financial Officer M Stephen – Commercial Director & Deputy Chairman M Kayser – Independent non-executive director (appointed 2 January 2024) S Robinson – Non-Executive director (resigned 3 July 2023) R Wigley – Non-Executive Director (resigned 11 August 2023) A Brennan – Executive Director (resigned 11 August 2023) In accordance with the Articles of Association, one third of the Directors must retire by rotation from office at each AGM. 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 At 31 December 2023 At 1 January 2023 M Laurier I Bristow M Stephen N Clavel 23,424,316 23,424,316 1,163,731 1,352,176 550,000 1,163,731 1,352,176 550,000 Details of the Directors’ interests in options granted under the Group’s share scheme are set out in the Remuneration Committee Report on page 34. Financial risk management policies and objectives The Group’s financial risk management policies are detailed in note 23 to the annual report and accounts. A summary of the Group’s key operating risks is set out on page 19. 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 23 to the annual report and accounts Symphony Environmental Technologies plc Annual Report and Accounts 2023Directors’ Report Continued Streamlined Energy and Carbon Reporting (SECR) The Companies Act 2006 (Strategic Report and Directors’ Report) Regulation 2018 requires disclosure of annual UK energy consumption and Greenhouse Gas (GHG) emissions from SECR regulated sources. Reported energy and GHG emissions data is compliant with SECR requirements and has been calculated in accordance with the GHG Protocol and SECR guidelines. Energy and GHG emissions are reported from buildings and transport where operational control is held – this includes electricity and natural gas. The Group does not have any company-owned vehicles. The table below details the regulated SECR energy and GHG emission sources for the reported periods. 100% UK Natural gas Electricity Total Intensity ratio £million revenue tCO2e per £million of revenue 2023 Emissions tCO2e 2022 Energy mWh 2022 Emissions tCO2e 2023 Energy mWh 39.85 187.63 7.17 38.5 227.48 45.67 6.36 7.18 34.4 194.7 229.1 6.18 37.65 43.83 6.15 7.13 Metered kWh consumption is taken from supplier invoices where possible or calculated using manual meter readings. Transport emissions were significantly below 1 tonne and so have not been reported. Conversions to tCO2e were made using DEFRAs “UK Government GHG Conversion Factors for Company Reporting” Conversion Factors 2023 publication. The Group is committed to reducing its environmental impact and contribution to climate change. The Group is certified to ISO 14001, monitors its energy impact on a regular basis and undertakes to minimise energy consumption where practicable 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 18 to the annual report and accounts. Details of employee share options and warrants are also set out in note 18. Governance 30 Significant shareholdings The significant shareholders in the Company (holding shares in excess of 3%) as at 31 December 2023 were as follows: Shareholder Somerston Environmental Technologies Limited M Laurier Sea Pearl Ventures Limited (Prior Vincel Investments Limited) S Robinson* % total shareholding 18.24% 12.68% 17.39% 6.23% * Including S Robinson’s interests in Somerston Environmental Technologies Limited shareholding. Political donations During the year ended 31 December 2023 the Group made no political donations (2022: £nil). Going concern The Group has made an operating loss of £1.99 million for the year (2022: loss £2.93 million). With underlying gross margins (before provisions) remaining above 40%, the Group has also been able to reduce costs after investing heavily and having created significant opportunities on a technical and marketing standpoint. This has resulted in multiple sales opportunities which are expected to come to fruition in the short-term. On the basis of current financial projections, which have been drawn out to the end of 2025, including a sensitised cash flow analysis (sensitised by revenue being the primary area of forecast risk), together with available funds and facilities, the Directors are satisfied that the Group has adequate resources to continue in operational existence for at least 12 months from the date of approval of the financial statements, and accordingly, continue to adopt the going concern basis in preparing the Group and Company financial statements. This is primarily underpinned by the following: o Middle East volumes expected to increase o Repeat and growing d2p AI and other d2p business o Steadier main markets in Far East and Latin America with good growth potential o Administrative costs further reduced from 2023 levels Although net current liabilities are £1.6 million at the end of the year, this includes £1.5 million in unsecured convertible loan funding received during the year for which repayment since the year end has been extended to 31 December 2025. In addition, the Group has since the year end raised £1.4 million of equity by subscription and retail offer and is also supported by an invoice finance facility from the Group’s bankers. Symphony Environmental Technologies plc Annual Report and Accounts 2023Governance 31 Directors’ Report Continued Systems are in place which enable monitoring of cashflow requirements of the business which identifies any need for borrowing and usage of borrowed funding. The Group is not materially affected by any political or economic uncertainty. Auditor Forvis Mazars LLP has expressed its willingness to continue in office as auditor to the Company. A resolution to reappoint Forvis 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: o so far as he is aware, there is no relevant audit information of which the Company’s and Group’s auditor is unaware; and o 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 2024 AGM date is still to be set. 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 6 June 2024. M Laurier Chief Executive 6 June 2024 Events since statement of financial position date On 13 March 2024 The conversion dates of the convertible loans with Sea Pearl Ventures Limited (see note 28) have been extended 15 months from 30 September 2024 to 31 December 2025. On 24 March 2024 the Group raised £1.4 million of equity by subscription and retail offer. There have been no other material events since the statement of financial position date. 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 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. 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. Matters covered in the Strategic Report As permitted by section 414C(11) of The Companies Act 2006, matters relating to research and development which are required to be disclosed in the Director’s Report have been omitted as they are included in the Strategic Report instead. Symphony Environmental Technologies plc Annual Report and Accounts 2023Governance 32 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 UK-adopted international accounting standards. 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: o Select suitable accounting policies for the Group’s financial statements and apply them consistently; o Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business; o Present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; o Provide additional disclosures when compliance with the specific requirements in the UK-adopted international accounting standards 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; o State that the Group and the Company have complied with UK-adopted international accounting standards subject to any material departures disclosed and explained in the financial statements; and o 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: o The Group financial statements which have been prepared in accordance with UK-adopted international accounting standards, give a true and fair view of the assets, liabilities, financial position and profit of the Group. o 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. o 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 6 June 2024. N Clavel Chairman 6 June 2024 Symphony Environmental Technologies plc Annual Report and Accounts 2023 Governance 33 Audit Committee Report Significant issues considered for the year ending 31 December 2023 The Committee considered: o Revenue recognition and in particular the revenue cut-off over the year-end, and was satisfied that IFRS 15 ‘Revenues from contracts with customers’ was correctly applied. o Capitalised development costs and was satisfied that IAS 38 was correctly applied. Audit Committee effectiveness The Committee reviews its effectiveness on an ongoing basis. M Kayser Chairman of the Audit Committee 6 June 2024 Dear Shareholder As the Chairman of Symphony’s Audit Committee, I present my Audit Committee Report for the year ended 31 December 2023, 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. Accordingly, the Committee recommended to the Board that Forvis Mazars LLP be re-appointed for the next financial year. During 2023, the Committee: o met with the external auditors to review and approve the annual audit plan and receive their findings and report on the annual audit; o considered significant issues and areas of judgement with the potential to have a material impact on the financial statements; o 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 o reviewed and approved the interim and year end results. In addition to the Committee’s ongoing duties, the Committee has and will continue to: o consider significant issues and areas of judgement with the potential to have a material impact on the financial statements; and o keep the need for an internal audit function under review, having regard to the Company’s strategy and resources. Symphony Environmental Technologies plc Annual Report and Accounts 2023Governance 34 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 2023, 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 2023 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: o 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. o Provide a level of remuneration required to attract and motivate high-calibre Executive Directors and senior management of appropriate calibre. o Encourage value creation through consistent and transparent alignment of incentive arrangements with the agreed company strategy over the long term. o Ensure the total remuneration packages awarded to Executive Directors, comprising both performance-related and non- performance-related remuneration, are 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, and M Kayser 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 2023 No annual bonuses are payable for the year ended 31 December 2023 (2022: £nil). As announced by RNS on 28 December 2023, extensions were granted to the exercise period of options held by the Directors. See page 35. Remuneration Committee effectiveness The Committee reviews its effectiveness on an ongoing basis. Symphony Environmental Technologies plc Annual Report and Accounts 2023Governance 35 Remuneration Committee Report Continued Directors’ emoluments The table below sets out the total emoluments received by each Director who served during the year ended 31 December 2023. M Laurier I Bristow M Stephen N Clavel S Robinson (resigned 11 August 2023) R Wigley (resigned 11 August 2023) A Brennan (resigned 11 August 2023) Basic Salary £’000 Benefits £’000 2023 Total Emoluments £’000 2022 Total Emoluments £’000 257 160 165 16 8 10 10 626 3 – – – – – – 3 260 160 165 16 8 10 10 629 221 145 166 16 16 16 10 590 There were no directors pension contributions made during the year (2022: £nil). Share options The Directors have share options and warrants, or interests in share options and warrants as follows: M Laurier M Laurier I Bristow I Bristow M Stephen M Stephen N Clavel N Clavel Number of share options or warrants Exercise price (pence per share) Exercisable from Exercisable to See below 1,851,500 350,000 3,000,000 280,000 2,000,000 210,000 500,000 250,000 4.500 26 November 2008 31 December 2024 12.500 31 March 2010 31 December 2024 4.500 26 November 2008 31 December 2024 12.500 31 March 2010 31 December 2024 4.500 26 November 2008 31 December 2024 12.500 31 March 2010 31 December 2024 4.500 16 October 2009 31 December 2024 12.500 18 December 2010 31 December 2024 The above share options and warrants are HM Revenue and Customs unapproved. Options were due to expire on 31 December 2023 but have been extended to 31 December 2024. N Clavel Chairman of the Remuneration Committee 6 June 2024 Symphony Environmental Technologies plc Annual Report and Accounts 2023Governance 36 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 2023 which comprise the Consolidated statement of comprehensive income, the Consolidated statement of financial position, the Consolidated statement of changes in equity, the Consolidated cash flow statement, the Company statement of financial position, the Company statement of changes in equity, and notes to the financial statements, including material accounting policy information. The financial reporting framework that has been applied in their preparation is applicable law and UK-adopted international accounting standards and, as regards the parent company financial statements, FRS 101 “Reduced Disclosure Framework” (United Kingdom Generally Accepted Accounting Practice) as applied in accordance with the provisions of the Companies Act 2006. In our opinion, the financial statements: o give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 December 2023 and of the group’s loss for the year then ended; Conclusions relating to going concern In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our audit procedures to evaluate the directors’ assessment of the group’s and the parent company’s ability to continue to adopt the going concern basis of accounting included but were not limited to: o Undertaking an initial assessment at the planning stage of the audit to identify events or conditions that may cast significant doubt on the group’s and the parent company’s ability to continue as a going concern; o Obtaining an understanding of the relevant controls relating to the directors’ going concern assessment; o Evaluating the directors’ method to assess the group’s and the parent company’s ability to continue as a going concern; o Evaluating the key assumptions used and judgements applied by the directors in forming their conclusions on going concern; o Evaluating the group’s performance in the year as well as post year end information available; o Review of funding in place including terms thereof and o have been properly prepared in accordance with UK-adopted any new funding requirements; international accounting standards and, as regards the parent company financial statements, FRS 101 “Reduced Disclosure Framework” (United Kingdom Generally Accepted Accounting Practice) as applied in accordance with the provisions of the Companies Act 2006: and o 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 the parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, as applied to SME listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. o Review of the cashflow forecasts; and o Reviewing the appropriateness of the directors’ disclosures in the financial statements. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group’s and the parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. 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. Symphony Environmental Technologies plc Annual Report and Accounts 2023Governance 37 Independent Auditor’s Report Continued Key Audit Matter How our scope addressed this matter Revenue recognition policy - Group only (Note 2) The Group’s accounting policy in respect of revenue recognition is set out in the accounting policies on page 48 of the financial statements. For Symphony Environmental Technologies PLC, we identify the risk around revenue recognition as being principally in relation to cut off, due to the potential to inappropriately shift the timing and basis of revenue recognition. Due to revenue being a key benchmark in a user’s assessment of the performance of the Group, we consider revenue recognition to be a key audit matter. Key Audit Matter Intercompany debtors and Investments - Parent only (Note 2, 26, 27) The group’s accounting policy in respect of financial assets is set out in the accounting policies on page 50 of the financial statements. For Symphony Environmental Technologies PLC, we identify the risk around recovery of intercompany balances held with Symphony Environmental Limited (SEL) of £4,550,000 (2022: £6,912,000), as per note 27, and the investment value of £1,386,000 (2022: £1,309,000), as per note 26, held due to the trading results of the group which is still loss making. We confirmed our understanding of the processes and controls relevant to the revenue recognition policy of the company by performing walkthrough procedures. We evaluated the design and implementation of the controls and concluded that a substantive audit approach should be adopted. Consequently, we did not test the operating effectiveness of the controls identified. As part of our substantive procedures: o Obtained and critically assessed the revenue recognition policy to ensure they comply with the IFRS requirements and o On sample basis from revenue reported one month 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. Our observations Based on the results of our procedures performed above, we consider revenue recognition is appropriate, and in line with the accounting policy described on page 48. We confirmed our understanding of the processes and controls relevant by performing walkthrough procedures. We evaluated the design and implementation of the controls and concluded that a substantive audit approach should be adopted. Consequently, we did not test the operating effectiveness of the controls identified. Followed by the following substantive procedures performed: o We critically assessed the information included in forecast prepared for SEL including the underlying assumptions used; o Assessed the historic levels of managements forecasting accuracy; o We assessed managements discounted cash flow forecasts and reperformed the calculation to confirm its accuracy; o Challenged discount rates used in discounted cashflow forecasts; o Performed sensitivity analysis on key assumptions and expected cash flows in the model; and o Assessed the forecasts and preformed a stand back review to look for disconfirming evidence in post year end data and market information. Our observations Based on the results of our procedures performed above, we consider the intercompany debtors and investments to be materially correct, and in line with the accounting policy described on page 50. Symphony Environmental Technologies plc Annual Report and Accounts 2023Governance 38 Independent Auditor’s Report Continued Our application of materiality and an overview of the scope of our audit 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: Group materiality Group Overall materiality £114,400 (2022: £110,772) How we determined it Group materiality has been calculated by reference to total revenue, of which it represents 2% (2022: 2% of total revenue). Parent company materiality Parent company £57,200 (2022: £55,386) Materiality for the Parent company has been calculated with reference to net assets, of which is represents 5% (capped to the above balance due to group audit limits) (2022: 5% of net assets). Rationale for benchmark applied Revenue has been identified as the principal benchmark within the Group financial statements as it is considered to be the focus of shareholders at this time due to the Group being historically loss making. Net assets has been identified as the principal benchmark within the Parent company financial statements as it is considered to be the focus of shareholders due to being a holding company with no trade. Performance materiality 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. 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. We set performance materiality at £85,800, which represents 75% of overall materiality. We set performance materiality at £42,900, which represents 75% of overall materiality. Reporting threshold We agreed with the directors that we would report to them misstatements identified during our audit above £3,432 as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons. We agreed with the directors that we would report to them misstatements identified during our audit above £1,716 as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons. As part of designing our audit, we assessed the risk of material misstatement in the financial statements, whether due to fraud or error, and then designed and performed audit procedures responsive to those risks. In particular, we looked at where the directors made subjective judgements, such as assumptions on significant accounting estimates. Symphony Environmental Technologies plc Annual Report and Accounts 2023 Independent Auditor’s Report Continued We tailored the scope of our 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 our risk assessment, our understanding of the group and the parent company, their environment, controls, and critical business processes, to consider qualitative factors to ensure that we obtained sufficient coverage across all financial statement line items. Our group audit scope included an audit of the group and the parent company financial statements. Based on our risk assessment, all active entities of the group, including the parent company, were subject to full scope audit performed by the group audit team thus covering 100% of revenue, the loss of the group and the assets of the group. At the parent company level, the group audit team 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 other information comprises the information included in the Annual Report and Accounts 2023 other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information. 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. 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 course of audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. 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. Governance 39 Opinions on other matters prescribed by the Companies Act 2006 In our opinion, based on the work undertaken in the course of the audit: o 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 o 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: o 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 o the parent company financial statements are not in agreement with the accounting records and returns; or o certain disclosures of directors’ remuneration specified by law are not made; or o 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 32, 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. Symphony Environmental Technologies plc Annual Report and Accounts 2023Governance 40 In addition, we evaluated the directors’ and management’s incentives and opportunities for fraudulent manipulation of the financial statements, including the risk of management override of controls, and determined that the principal risks related to posting manual journal entries to manipulate financial performance, management bias through judgements and assumptions in significant accounting estimates, and revenue recognition (which we pinpointed to the cut off assertion), and significant one-off or unusual transactions. Our audit procedures in relation to fraud included but were not limited to: o Making enquiries of the directors and management on whether they had knowledge of any actual, suspected or alleged fraud; o Gaining an understanding of the internal controls established to mitigate risks related to fraud; o Discussing amongst the engagement team the risks of fraud; and o Addressing the risks of fraud through management override of controls by performing journal entry testing. There are inherent limitations in the audit procedures described above and the primary responsibility for the prevention and detection of irregularities including fraud rests with management. As with any audit, there remained a risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal controls. The risks of material misstatement that had the greatest effect on our audit are discussed in the “Key audit matters” section of this report. 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. Independent Auditor’s Report Continued 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 the financial statements. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below. Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. Based on our understanding of the company and its industry, we considered that non-compliance with the following laws and regulations might have a material effect on the financial statements: employment regulation, health and safety regulation and anti-money laundering regulations. To help us identify instances of non-compliance with these laws and regulations, and in identifying and assessing the risks of material misstatement in respect to non-compliance, our procedures included, but were not limited to: o Inquiring of management and, where appropriate, those charged with governance, as to whether the group and the parent company is in compliance with laws and regulations, and discussing their policies and procedures regarding compliance with laws and regulations; o Inspecting correspondence, if any, with relevant licensing or regulatory authorities; o Communicating identified laws and regulations to the engagement team and remaining alert to any indications of non-compliance throughout our audit; and o Considering the risk of acts by the group and the parent company which were contrary to applicable laws and regulations, including fraud. We also considered those laws and regulations that have a direct effect on the preparation of the financial statements, such as UK tax legislation and the Companies Act 2006. Symphony Environmental Technologies plc Annual Report and Accounts 2023Governance 41 Independent Auditor’s Report Continued 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. Stephen Brown (Senior Statutory Auditor) for and on behalf of Forvis Mazars LLP Chartered Accountants and Statutory Auditor The Pinnacle 160 Midsummer Boulevard Milton Keynes MK9 1FF 6 June 2024 Symphony Environmental Technologies plc Annual Report and Accounts 2023Symphony Environmental Technologies plc Annual Report and Accounts 2023 42 Financial statements 43 Consolidated statement of comprehensive income for the year ended 31 december 2023 Revenue Cost of sales Gross profit Distribution costs Administrative expenses Operating loss Finance costs Share of results of joint ventures Loss for the year before tax Taxation Loss for the year Total comprehensive loss for the year Basic earnings per share Diluted earnings per share Note 4 5 7 14 8 9 9 2023 £’000 6,351 (4,018) 2,333 (203) (4,119) (1,989) (189) (73) (2,251) 71 (2,180) (2,180) (1.18)p (1.18)p 2022 £’000 6,154 (3,874) 2,280 (408) (4,802) (2,930) (77) - (3,007) 120 (2,887) (2,887) (1.65)p (1.65)p 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. Symphony Environmental Technologies plc Annual Report and Accounts 2023Financial statements 44 Consolidated statement of financial position as at 31 december 2023 Company number 03676824 S T E S S A Non-current Property, plant and equipment Right-of-use assets Intangible assets Investments Interest in joint venture Current Inventories Trade and other receivables Cash and cash equivalents Total assets Note 10 11 12 13 14 15 16 17 I S E T I L I B A I L D N A Y T U Q E I 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 18 18 18 19 19 19 20 2023 £’000 168 270 653 130 28 1,249 645 1,812 1,123 3,580 4,829 1,848 4,854 (7,102) (400) 47 187 3,270 1,725 5,182 5,229 4,829 2022 £’000 138 379 439 130 101 1,187 1,175 2,349 1,152 4,676 5,863 1,848 4,854 (4,999) 1,703 181 167 1,991 1,821 3,979 4,160 5,863 These annual report and accounts were approved by the Board of Directors on 6 June 2024 and authorised for issue on 6 June 2024. 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. Symphony Environmental Technologies plc Annual Report and Accounts 2023 Financial statements 45 Consolidated statement of changes in equity for the year ended 31 december 2023 Equity attributable to the equity holders of Symphony Environmental Technologies plc: For the year to 31 December 2023 Balance at 1 January 2023 Share based options (note 18) Transactions with owners Total comprehensive loss for the year Balance at 31 December 2023 For the year to 31 December 2022 Balance at 1 January 2022 Share based options (note 18) Issue of share capital (note 18) Transactions with owners Total comprehensive loss for the year Share capital £’000 Share premium £’000 Retained earnings £’000 1,848 4,854 (4,999) - - - 1,848 1,793 - 55 55 - - - - 4,854 3,910 - 944 944 - 77 77 (2,180) (7,102) (2,231) 119 - 119 (2,887) (4,999) Total equity £’000 1,703 77 77 (2,180) (400) 3,472 119 999 1,118 (2,887) 1,703 Balance at 31 December 2022 1,848 4,854 The accompanying notes form an integral part of these annual report and accounts. Symphony Environmental Technologies plc Annual Report and Accounts 2023Consolidated cash flow statement for the year ended 31 december 2023 Cash flows from operating activities Loss after tax Adjustments for: Depreciation Amortisation Loss on disposal of fixed assets Loss on disposal intangible Share-based charges Share of JV loss Interest expense Net exchange differences 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 Additions to joint venture Additions to investments Net cash used in investing activities Cash flows from financing activities Drawdown cash received from invoice finance facility Customer receipts repayment of invoice finance facility Convertible loan Repayment of lease capital Proceeds from share issue Lease interest paid Bank, invoice finance and other interest paid Net cash generated in financing activities Net change in cash and cash equivalents Cash and cash equivalents, beginning of year Effect of exchange rates on cash Cash and cash equivalents, end of year Represented by: Cash and cash equivalents Bank overdraft Note 10-11 12 5 5 18 14 7 8 15 16 20 8 10 12 14 13 19 19 19 19 18 7 7 17 19 Financial statements 46 2023 £’000 2022 Restated £’000 (2,180) (2,887) 220 15 3 28 77 73 189 (12) (71) 530 594 (85) (619) 97 (522) (84) (257) - - (341) 5,686 (5,927) 1,500 (174) - (17) (172) 896 33 18 (19) 32 1,123 (1,091) 32 229 14 14 - 119 77 - (120) 141 797 30 (1,586) 120 (1,466) (18) (194) (101) (7) (320) 5,406 (4,549) - (179) 999 (22) (55) 1,600 (186) 204 - 18 1,152 (1,134) 18 Cash flows from financing activities has been restated in 2022 to show gross monies drawn down against customer receipts as opposed to a net movement in the facility drawn. The accompanying notes form an integral part of these annual report and accounts. Symphony Environmental Technologies plc Annual Report and Accounts 2023 Financial statements 47 Notes to the Annual Report and Accounts 1. General information Going concern Symphony Environmental Technologies plc (‘the Company’) and subsidiaries (together ‘the Group’) develops and supplies environmental plastic additives and masterbatches, together with plastic and rubber finished 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 This consolidated annual report and accounts has been prepared in accordance with UK-adopted international accounting standards in conformity with the requirements of the Companies Act 2006. These consolidated annual report and accounts have been prepared under the historical cost convention except for investments and derivative financial instruments that are measured at fair value. 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 2023. 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. The Group has made an operating loss of £1.99 million for the year (2022: loss £2.93 million). With underlying gross margins (before provisions) remaining above 40%, the Group has also been able to reduce costs after investing heavily and having created significant opportunities on a technical and marketing standpoint. This has resulted in multiple sales opportunities which are expected to come to fruition in the short-term. On the basis of current financial projections, which have been drawn out to the end of 2025, including a sensitised cash flow analysis (sensitised by revenue being the main area of forecast risk), together with available funds and facilities, the Directors are satisfied that the Group has adequate resources to continue in operational existence for at least 12 months from the date of approval of the financial statements, and accordingly, continue to adopt the going concern basis in preparing the Group and Company financial statements. This is primarily underpinned by the following: o Middle East volumes expected to increase o Repeat and growing d2p AI and other d2p business o Steadier main markets in Far East and Latin America with good growth potential o Administrative costs further reduced from 2023 levels Although net current liabilities are £1.6 million at the end of the year, this includes £1.5 million in unsecured convertible loan funding received during the year for which repayment since the year end has been extended to 31 December 2025. In addition, the Group has since the year end raised £1.4 million of equity by subscription and retail offer and is also supported by an invoice finance facility from the Group’s bankers. Systems are in place which enable monitoring of cashflow requirements of the business which identifies any need for borrowing and usage of borrowed funding. The Group is not materially affected by any political or economic uncertainty. Symphony Environmental Technologies plc Annual Report and Accounts 2023Financial statements 48 Notes to the Annual Report and Accounts Continued Revenue - Plastic additives and finished products, and associated products Revenue is stated at the fair value of the consideration receivable and excludes VAT and trade discounts. The Group’s revenue is from the sale of goods. Revenue from the sale of goods is recognised in conformity to IFRS 15 ‘Revenues from Contracts with Customers’ following the 5 step approach. This has been detailed below: o 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. o Identification of the separate performance obligations in the contract – The Group must fulfil the following obligations, which are agreed on acceptance of the purchase order: - To make the goods available for dispatch on the required date; and - To organise freight in accordance with agreed INCOTERMs (a series of pre-defined commercial terms published by the International Chamber of Commerce). o 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. o 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 an agent in the provision of transport rather than the principal under IFRS 15 “Revenues from Contracts with Customers”. o 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: o completion of the intangible asset is technically feasible so that it will be available for use or sale; o the Group intends to complete the intangible asset and use or sell it; o the Group has the ability to use or sell the intangible asset; and o 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: o there are adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and o 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 - 10 years straight line. Judgements and estimates made by the Directors when deciding whether the recognition requirements for development costs have been met are included in note 3. All amounts disclosed within note 12 in development costs relate to plastic masterbatches and other additives. Symphony Environmental Technologies plc Annual Report and Accounts 2023 Financial statements 49 Notes to the Annual Report and Accounts Continued - Trademarks Leased assets 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, to administrative expenses 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, to administrative expenses over the useful economic life of that asset as follows: Plant and machinery - 20% reducing balance. Fixtures and fittings - 10% straight line. Office equipment - 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. Any impairment is recognised within expenses in the statement of comprehensive income. 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: o 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 o 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 o 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 statement of financial position 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. Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. 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. Symphony Environmental Technologies plc Annual Report and Accounts 2023Financial statements 50 Notes to the Annual Report and Accounts Continued Investments in joint ventures Taxation A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. The results and assets and liabilities of joint ventures are incorporated in these financial statements using the equity method of accounting. Under the equity method, an investment in a joint venture is recognised initially in the consolidated statement of financial position at cost as at the date of acquisition and adjusted thereafter to recognise the Group’s share of the profit or loss and other comprehensive income of the joint venture. When the Group’s share of losses of a joint venture exceeds the Group’s interest in that associate or joint venture (which includes any long-term interests that, in substance, form part of the Group’s net investment in the associate or joint venture), the Group discontinues recognising its share of further losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the joint venture. Investments Minority investments in shares are initially held at cost. Fair value is assessed on an annual basis and any gain or loss is adjusted through profit and loss. 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. 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 the 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 statement of financial position 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 statement of financial position date. Transactions in foreign currencies are translated into Sterling at the rate of exchange ruling at the date of the transaction. Exchange differences are taken into account in arriving at the operating result. Financial assets The Group classifies all of its financial assets measured at amortised cost, apart from investments. 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. Symphony Environmental Technologies plc Annual Report and Accounts 2023Financial statements 51 Notes to the Annual Report and Accounts Continued 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. The Group considers a financial asset in default when it is unlikely to receive the outstanding contractual amounts in full. 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. Cash balances which are overdrawn are referenced in financial liabilities below. 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: o 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. o Bank, convertible loans 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. Redemption of the convertible loan can be in cash or equity in accordance with note 19. Convertible loans are classified as financial liabilities unless and until they are converted into equity. The convertible loans accrue interest and can be repaid by cash at the Group’s discretion up until the contracted day of conversion. 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 goods and services received in exchange for the grant of any share-based payment are measured at their fair values. Where employees and third parties 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. For employees, the fair value is charged to the statement of comprehensive income between the date of issue and the date the share options vest with a corresponding credit taken to equity. For third parties the fair value is charged over the length of services received. Equity Equity comprises the following: o “Share capital” represents the nominal value of equity shares; o “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 o “Retained earnings” represents gains and losses arising from amounts recognised in profit or loss and the fair value of options granted under the Group’s share-based payment schemes. Symphony Environmental Technologies plc Annual Report and Accounts 2023 Financial statements 52 Notes to the Annual Report and Accounts Continued 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. 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: 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. 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 Estimates: In preparing these accounts the following areas were considered to involve significant estimates: o IAS 1 Presentation of Financial Statements: Disclosure - Recognition of deferred tax assets Judgements and estimates relating to a deferred tax asset are detailed in notes 2 and 8. 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. The unrecognised deferred tax asset as at 31 December 2023 was approximately £5,078,000. - Investments Estimates and judgements are made as to the carrying value of Investments based on the status of the investment against expectations and the forward-looking prospects. In order to calculate fair value, judgements and estimates have been made as to the financing and operating risk of the invested company, together with the marketability of the investment. The carrying value of investments as at 31 December 2023 was £130,000. See note 13. of accounting policies. Effective 1 January 2023 o IAS 8 Accounting policies, changes in accounting estimates and errors (Amendment): Definition of accounting estimates. Effective 1 January 2023 o IAS 12 Income taxes: Deferred tax relating to assets and liabilities arising from a single transaction. Effective 1 January 2023 o IFRS 17 Insurance contracts: Amendments in relation to initial application and IFRS 9 – comparative information. Effective 1 January 2023 New and revised UK-adopted international accounting 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 UK-adopted international accounting standards that have been issued but are not yet effective. The Group does not expect any of the standards which have been issued, but are not yet effective, to have a material impact on the Group. o IAS 1 Presentation of Financial Statements: Amendments in relation to the classification of liabilities as current or non-current. Effective 1 January 2024 o IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments Disclosures: Amendments in relation to supplier finance arrangements. Effective 1 January 2024 o IAS 16 Leases: Amendments in relation to lease liability in a sale and leaseback. Effective 1 January 2024 Symphony Environmental Technologies plc Annual Report and Accounts 2023Financial statements 53 Notes to the Annual Report and Accounts Continued - Inventory provisions Judgements: Estimates are made as to impairment provisions to the carrying value of inventories based whether the items are still sellable and also the expected net value that can be achieved on sale. The resultant value was calculated based on net proceeds fairly achievable over the short to medium term and were based on specific items where saleability is in doubt, and the dates of the last movements of each stock item as an indicator to future value except for certain raw material items which are known to be required in the short term. There is a provision of £235,000 for the impairment of inventories as at 31 December 2023. See note 15. Shortening the period of last movements by six months has an effect of increasing the provision by £15,000 as at 31 December 2023. - Expected credit losses (ECLs) Trade receivables are reflected net of an estimated provision for impairment losses. In line with IFRS 9, the Group uses an expected credit loss model to determine the provision for doubtful debts and also specific provisions for balances for which it has specific concerns over recoverability. The expected credit loss model involves segmenting debtors into groups and applying specific percentages to each of the debtor groupings. The Group has considered the profile of its debtor balance and has determined that a grouping based on credit terms and aging is considered the most appropriate. In addition, forward looking information has been used in the assessment and conclusion of ECLs in line with the model. Higher percentages are applied the longer the term with the customer and the older the debt with the customer, with the view that there is a greater risk of unforeseen circumstances arising the further away the settlement date. See note 16 for further information. At the year end, the Group has provisions of £75,000 (2022: £78,000) on a total trade receivables balance of £1,586,000 (2022: £1,901,000) calculated using this method. An increase of 10% on the ECL as at 31 December 2023 would increase the provision by £7,000. In preparing these accounts the following areas were considered to involve significant judgements: - 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. - Development costs Judgements by the Directors are applied when deciding whether the recognition requirements for development costs have been met. In capitalising these costs, judgements are made relating to ongoing feasibility and commerciality of products being developed. In making these judgements, cash flow forecasts are used, and these include significant estimates in respect to sales forecasts and future economic feasibility. See note 12. 4. Segmental information and revenue analysis 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 operating segment. The Board assesses the commercial performance of the business based upon the revenues of the main products items within its single operating segment as follows: Revenues d2w masterbatches d2p masterbatches Finished products Other Total 2023 £’000 5,221 512 424 194 6,351 2022 £’000 4,768 793 472 121 6,154 Symphony Environmental Technologies plc Annual Report and Accounts 2023 Financial statements 54 Notes to the Annual Report and Accounts Continued The revenues of the Group are divided in the following geographical areas: Geographical area UK Europe North America Central and South America Middle East Asia Total 2023 £’000 428 878 161 2,066 2,073 745 6,351 2022 £’000 408 722 274 2,582 1,183 985 6,154 Revenues attributable to the above geographical areas are made on the basis of final destination of the customer to which the goods are sold. The geographical areas above are what the Company considers to be key markets. Within the above, revenues are attributed to the following countries which are represented by over 5% of total revenues: Country UAE Mexico UK China France Other countries Total 2023 £’000 1,985 1,455 428 375 354 1,754 6,351 2022 £’000 803 1,659 408 312 337 2,635 6,154 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 geographical and product analysis provided above. Credits are made to revenue on agreement of a dispute. Payments are made by customers either before or after satisfaction of performance obligations depending on the credit risk associated with the 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 obligations is made before payment, then the value is included in accounts receivable until extinguished by the payment. Major customers There was one customer that accounted for greater than 10% of total Group revenues for 2023 (2022: one customer). In 2023 the one customer accounted for £1,863,000 or 29% (2022: £654,000 and one customer being 11%) of total group revenues. The Group promotes its products through a global network of distributors and aims to generate revenues from as many sources as practicable. 5. Operating loss The operating loss is stated after crediting: 2023 £’000 2022 £’000 Depreciation – property, plant and equipment Depreciation – right-of-use assets Loss on disposal of property, plant and equipment Amortisation Amortisation Loss on disposable of intangible assets Research and development expenditure* 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 Net foreign exchange loss/(gain) 51 169 3 15 28 210 35 50 26 * Further development expenditure of £250,000 (2022: £168,000) is included in Development cost additions – see note 12. 6. Directors and employees Staff costs (including directors) during the year comprise: 50 179 14 14 - 510 30 45 (29) 2022 £’000 2,115 162 156 2,433 Products are sold based on quality criteria, and the Group warrants performance of its products after appropriate tests and trials are undertaken. Refunds are given or products are replaced if there is a failure within the product quality assured by Symphony, or its agreed performance. Wages and salaries Social security costs Pension contributions Total Non-current assets of £9,000 are held outside of the UK (2022: £14,100). Remuneration in respect of the Directors, who are also the key management, was as follows: 2023 £’000 1,874 216 127 2,217 Symphony Environmental Technologies plc Annual Report and Accounts 2023 Notes to the Annual Report and Accounts Continued Average monthly number of people (including directors) by activity: 8. Taxation R&D, testing and technical Selling Administration Management Marketing Total average headcount 2023 2022 6 9 11 6 1 33 10 11 12 7 3 43 Remuneration in respect of the Directors, who are also the key management, was as follows: Emoluments (all short term) 2023 £’000 629 2022 £’000 590 There were no Directors’ pension contributions made during the year (2022: £nil). 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. Remuneration in respect to the highest paid director was as follows: Highest paid director 7. Finance costs Interest expense: Bank, invoice finance borrowings, and other Convertible loan Lease interest (right-of- use assets) Total finance costs 2023 £’000 260 2022 £’000 221 2023 £’000 2022 £’000 109 63 17 189 55 - 22 77 Financial statements 55 2023 £’000 71 71 2022 £’000 120 120 R&D tax credit Total income tax credit No tax arises on the loss for the year. The tax assessed for the year is different from the standard rate of corporation tax in the UK of 19% up to 31 March 2023 and 25% from 1 April 2023 (2022: 19%). The differences are explained as follows: Loss for the year before tax Tax calculated by rate of tax on the result Effective rate for year at 23.5% (2022: 19%) Fixed asset differences Expenses not deductible for tax purposes R&D tax relief Movement in deferred tax not recognised Surrender of tax losses for R&D tax credit refund R&D tax credit not yet recognised R&D tax credit in respect of previous periods Total income tax credit 2023 £’000 (2,251) 2022 £’000 (3,007) (529) (571) 1 38 (38) 451 40 37 (71) (71) (2) 24 (39) 520 16 52 (120) (120) 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 £71,000 shown above relates to a repayment made by HMRC in relation to the year ended 31 December 2022 (£120,000 relates to the year ended 31 December 2021). 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 2023 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 Technologies plc Annual Report and Accounts 2023 Financial statements 56 Notes to the Annual Report and Accounts Continued 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 £20,600,000 (2022: £18,939,000). These tax losses have no expiry date. The unrecognised deferred tax asset in respect of these losses based on latest profit projections is approximately £5,178,000 (2022: £4,735,000). These brought forward losses are subject to the loss restriction rules introduced on 1 April 2017. Groups with more than £5m taxable profits per annum will only be able to utilise 50% of their brought forward losses against taxable profits exceeding the £5m cap. As Symphony does not expect its taxable profits to exceed £5m in the near to immediate term, it is not possible to quantify the impact of these changes at this moment in time. The UK corporation tax rate applicable for the year is 19% up to 31 March 2023 and 25% from 1 April 2023 (2022: 19%). The Group also has gross fixed assets of £254,000 (2022: £258,000) which give rise to a deferred tax liability of £63,500 (2022: £65,000). Other gross temporary differences of £75,000 (2022: £85,000) give rise to a deferred tax asset of £18,750 (2022: £21,000). The deferred tax liability of £63,500 (2022: £65,000) is sheltered by the unrecognised deferred tax asset in respect of losses and temporary differences. The unrecognised deferred tax balances disclosed in the above for 2023 have been calculated at 25%. 9. Earnings per share and dividends The calculation of basic earnings per share is based on the loss 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 attributable to equity holders of the Company Weighted average number of ordinary shares in issue Basic earnings per share Dilutive effect of weighted average options and warrants 2023 2022 £(2,180,000) £(2,887,000) 184,806,833 175,226,254 (1.18) pence (1.65) pence 3,686,662 7,498,557 Total of weighted average shares together with dilutive effect of weighted options- see below 184,806,833 175,226,254 Diluted earnings per share (1.18) pence (1.65) pence No dividends were paid for the year ended 31 December 2023 (2022: £nil). The effect of options and warrants for the years ended 31 December 2023 and 31 December 2022 are anti-dilutive. A total of 12,866,500 options and warrants were outstanding at the end of the year which may become dilutive in future years. Symphony Environmental Technologies plc Annual Report and Accounts 2023Financial statements 57 Notes to the Annual Report and Accounts Continued 10. Property, plant and equipment Year ended 31 December 2023 Plant & Machinery £’000 Fixtures & Fittings £’000 Office Equipment £’000 Total £’000 Cost At 1 January 2023 Additions Disposals At 31 December 2023 Depreciation At 1 January 2023 Charge for the Year Disposals At 31 December 2023 Net Book Value At 31 December 2023 At 31 December 2022 397 2 (14) 385 305 19 (13) 311 74 92 293 - - 293 272 8 - 280 13 21 138 82 (74) 146 113 24 (72) 65 81 25 828 84 (88) 824 690 51 (85) 656 168 138 Year ended 31 December 2022 Plant & Machinery £’000 Fixtures & Fittings £’000 Office Equipment £’000 Total £’000 Cost At 1 January 2022 Additions Disposals At 31 December 2022 Depreciation At 1 January 2022 Charge for the Year Disposals At 31 December 2022 Net Book Value At 31 December 2022 At 31 December 2021 387 10 - 397 282 23 - 305 92 105 298 - (5) 293 269 8 (5) 272 21 29 140 8 (10) 138 103 19 (9) 113 25 37 825 18 (15) 828 654 50 (14) 690 138 171 Symphony Environmental Technologies plc Annual Report and Accounts 2023Financial statements 58 Notes to the Annual Report and Accounts Continued 11. Right-of-use assets Year ended 31 December 2023 Cost At 1 January 2023 Additions At 31 December 2023 Depreciation At 1 January 2023 Charge for the Year At 31 December 2023 Net Book Value At 31 December 2023 At 31 December 2022 Land & buildings £’000 Plant & Machinery £’000 Office Equipment £’000 905 - 905 545 160 705 200 360 - 60 60 - 4 4 56 - 78 - 78 59 5 64 14 19 Total £’000 983 60 1,043 604 169 773 270 379 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 19. Year ended 31 December 2022 Land & buildings £’000 Land & buildings £’000 Office Equipment £’000 Total £’000 Cost At 1 January 2022 Additions Disposal At 31 December 2022 Depreciation At 1 January 2022 Charge for the Year Disposal At 31 December 2022 Net Book Value At 31 December 2022 At 31 December 2021 905 - - 905 385 160 - 545 360 520 - - - - - - - - - - 70 22 (14) 78 42 19 (2) 59 19 28 975 22 (14) 983 427 179 (2) 604 379 548 Symphony Environmental Technologies plc Annual Report and Accounts 2023Financial statements 59 Notes to the Annual Report and Accounts Continued 12. Intangible assets Year ended 31 December 2023 Cost At 1 January 2023 Additions Disposals At 31 December 2023 Amortisation At 1 January 2023 Charge for the Year Disposals At 31 December 2023 Impairment At 1 January 2023 At 31 December 2023 Net Book Value At 31 December 2023 At 31 December 2022 Development costs £’000 Trademarks £’000 2,307 250 - 2,557 245 - - 245 1,728 1,728 584 334 142 7 (41) 108 37 15 (13) 39 - - 69 105 Total £’000 2,449 257 (41) 2,665 282 15 (13) 284 1,728 1,728 653 439 Development costs are capitalised in accordance with the policy set out in note 2. Judgements and estimates applied in accordance with this policy are set out in note 3. Development costs include a net book value of £584,000 (2022: £334,000). Amortisation will start on completion of the project in accordance with note 2. Year ended 31 December 2022 Development costs £’000 Trademarks £’000 Cost At 1 January 2022 Additions Disposals At 31 December 2022 Amortisation At 1 January 2022 Charge for the Year Disposals At 31 December 2022 Impairment At 1 January 2022 At 31 December 2022 Net Book Value At 31 December 2022 At 31 December 2021 2,139 168 - 2,307 245 - - 245 1,728 1,728 334 166 119 26 (3) 142 25 14 (2) 37 - - 105 94 Total £’000 2,258 194 (3) 2,449 270 14 (2) 282 1,728 1,728 439 260 Symphony Environmental Technologies plc Annual Report and Accounts 2023Financial statements 60 Notes to the Annual Report and Accounts Continued 13. Investments The Group holds investment interests in the following minority unlisted shares. Investment held at fair value: At 1 January 2023 Net change in fair value (unrealised) At 31 December 2023 At 31 December 2022 Total £’000 130 - 130 130 The Group has invested £130,000 (1.6%) into Eranova SAS, a French company developing products from green algae. The fair value for this investment, as shown above, is categorised as Level 3 because the shares were not listed on the exchange but there are inputs that are directly or indirectly observable. Sensitivity analysis For the fair value of this equity security as a whole, reasonably possible changes at the reporting date of one of the significant unobservable inputs, holding other inputs constant, would have the following effect. Adjusted total company value (5% movement) The valuation process relied on the following factors: o Equity valuation based on a recent fund raising creating an arms-length valuation o Recent fund-raising initiatives by Eranova o The current non-marketability of the shares o Inherent risks surrounding a developing company not at a fully commercial stage The Company is parent to the following subsidiary undertakings Increase £’000 7 Decrease £’000 (7) Name Country of incorporation Nature of business Proportion of ordinary shares held by parent Proportion of ordinary shares held by the Group Symphony Environmental Limited England and Wales D2W Limited England and Wales Development and supply of environmental plastic additives and products Dormant Symphony Recycling Technologies Limited Symphony Energy Limited England and Wales Dormant England and Wales Dormant 100% 0% 100% 100% 100% 100% 100% 100% All of the above subsidiaries are consolidated in the Group annual report and accounts. The above companies have their registered offices at 6 Elstree Gate, Elstree Way, Borehamwood, WD6 1JD. Symphony Environmental Technologies plc Annual Report and Accounts 2023Financial statements 61 Notes to the Annual Report and Accounts Continued 14. Interest in joint ventures At 1 January 2023 Share of joint venture total comprehensive income (see below) At 31 December 2023 Total £’000 101 (73) 28 The Group has a 46.5% share of Symphony Environmental India (Private) Limited, a company incorporated in India. The primary activity of Symphony Environmental India (Private) Limited is the marketing and sale of the Groups d2w and d2p product range in India. The contractual arrangement provides the Group with only the rights to the net assets of the joint arrangement, with the rights to the assets and obligation for liabilities of the joint arrangement resting primarily with Symphony Environmental India (Private) Limited. Under IFRS 11 this joint arrangement is classified as a joint venture and has been included in the consolidated financial statements using the equity method. Summarised material financial information in relation to the joint venture in accordance with IFRS 12 is shown below. Revenue (Loss)/profit from continuing operations (before and after tax) Total comprehensive income Group’s share of total comprehensive income (46.5%) Current assets Non-current assets Current liabilities Net assets Group’s share of net assets (46.5%) Year to 31 December 2023 £’000 Year to 31 December 2022 £’000 114 (156) (156) (73) 117 2 (171) (52) - 198 3 3 1 169 1 (70) 100 48 Within current liabilities are cash borrowings of £141,000 (2022: £29,000). There was no material cash and cash equivalents at the end of the year (2022: £nil). The joint venture’s reporting date is 31 March. The above is based on management information. There are no unrecognised losses, material capital commitments or contingent liabilities as at 31 December 2023. There were no dividends received during the year (2022: £nil). 15. Inventories Finished goods and goods for resale Raw materials 2023 £’000 364 281 645 2022 £’000 671 504 1,175 The cost of inventories recognised as an expense and included in ‘cost of sales’ amounted to £3,035,000 (2022: £3,094,000). There is a provision of £235,000 for the impairment of inventories (2022: £252,000). There is no collateral on the above amounts. Symphony Environmental Technologies plc Annual Report and Accounts 2023Notes to the Annual Report and Accounts Continued 16. Trade and other receivables Trade receivables Other receivables VAT Prepayments Financial statements 62 2023 £’000 1,511 90 18 193 1,812 2022 £’000 1,901 174 29 245 2,349 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 such as adherence to payment terms and length of time to settle payment, in addition to forward looking information utilising management knowledge such as the anticipated condition of the market in which its customers operate. 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. The maximum credit risk exposure at the statement of financial position date equates to the carrying value of trade receivables. Further disclosures are set out in note 23. Trade receivables are secured against the facilities provided by the Group’s bankers. As at 31 December 2023, £1,027,000 (2022: £1,530,000) of trade receivables had been sold to the Group’s bankers who are a provider of invoice discounting services. The Group is committed to underwrite any of the debts transferred and therefore continues to recognise the debts sold within trade receivables until the debtors repay or default. Since the trade receivables continue to be recognised, the business model of the Group is not affected. The proceeds from transferring the debts of £616,000 (2022: £857,000) are included in borrowings (note 19 - invoice finance facility) until the debts are collected or the Group makes good any losses incurred by the Group’s bankers. Included in trade receivables are debtors which are past due but where no provision has been made as there has not been a change in the credit worthiness of these debtors and the amounts are considered recoverable. The ageing analysis of debt taking into account credit terms is shown below. Days past due 31 December 2023 31 December 2022 0 - 30 £’000 1,272 1,488 31-60 £’000 0 236 61-90 £’000 100 61 91-120 £’000 0 19 >120 £’000 Total Gross £’000 214 175 1,586 1,979 ECL £’000 (75) (78) Total Net £’000 1,511 1,901 The ECL is included within debts past 120 days overdue at 36% for 2023 and 45% for 2022. 17. Cash and cash equivalents Cash at bank and in hand The carrying amount of cash equivalents approximates to their fair values. 2023 £’000 1,123 1,123 2022 £’000 1,152 1,152 Symphony Environmental Technologies plc Annual Report and Accounts 2023Financial statements 63 Notes to the Annual Report and Accounts Continued 18. Equity At 1 January 2023 Loss for the year Share based payments At 31 December 2023 At 1 January 2022 Issue of share capital Loss for the year Share based payments At 31 December 2022 Group and Company Group Ordinary shares Number Ordinary shares £’000 Share premium £’000 Retained earnings £’000 184,806,833 1,848 4,854 - - 184,806,833 179,251,277 5,555,556 - - - - 1,848 1,793 55 - - - - 4,854 3,910 944 - - 184,806,833 1,848 4,854 (4,999) (2,180) 77 (7,102) (2,231) - (2,887) 119 (4,999) Total £’000 1,703 (2,180) 77 (400) 3,472 999 (2,887) 119 1,703 During the year the Company issued nil Ordinary Shares (2022: 5,555,556 ordinary shares) for a net consideration of £nil (2022: £999,000). Ordinary shares in the Company carry one vote per share and each share gives equal rights to dividends and to the distribution of the Company’s assets in the event of liquidation. Share options and warrants Share options As at 31 December 2023 the Group maintained an approved share-based payment scheme for employee compensation. All share-based employee compensation will be settled in equity. There were no new approved staff options issued in the year (2022:4,000,000). As at 31 December 2023 there were 2,675,000 approved staff options outstanding (2022: 2,975,000). The Company has an unapproved share option scheme which is open to directors and consultants. Options granted under the scheme are for £nil consideration and are exercisable at a price equal to the quoted market price of the Company’s shares on the date of the grant. The vesting period is 0 to 12 months. If the options remain unexercised after a period of 2-15 years from the date of grant, the option expires. The weighted average exercise price of all of the Group’s options are as follows: Outstanding 1 January Granted Exercised Lapsed Outstanding 31 December Number 21,666,500 - - (8,800,000) 12,866,500 2023 Weighted average exercise price £ 0.15 - - 0.22 0.04 Number 16,441,500 7,725,000 - (2,500,000) 21,666,500 2022 Weighted average exercise price £ 0.14 0.25 - 0.40 0.15 The weighted average exercise price of options exercised in 2023 was £nil as no options were exercised during the period (2022: £nil). The number of share options and warrants exercisable at 31 December 2023 was 12,866,500 (2022: 21,666,500). The weighted average exercise price of those options and warrants exercisable was 4p (2022: 15p). The weighted average option and warrants contractual life is fifteen years (2022: ten years) and the range of exercise prices is 4.5p to 25p (2022: 4.5p to 30p). Directors Directors’ interests in shares and share incentives are contained in the Remuneration Committee Report on page 34. Symphony Environmental Technologies plc Annual Report and Accounts 2023Financial statements 64 Notes to the Annual Report and Accounts Continued IFRS2 expense The IFRS 2 share-based payment charge for the year is £77,000 (2022: £119,000). This relates to two schemes as follows: £30,000 of the charge was calculated using the Black Scholes model with a three-year term, risk free rate of 0.48%, volatility of 68.36% (based on 12 months share price month prior to grant) and dividend yield of 0%. £47,000 of the charge was calculated using the Black Scholes model with a two-year term, risk free rate of 1.60% to 1.72%, volatility of 54.9% (based on 12 months share price movement prior to grant) and dividend yield of 0%. 19. Borrowings Non-current Leases Current Bank overdraft Invoice finance facility Convertible Loan Borrowings Leases Total 2023 £’000 2022 £’000 47 181 1,091 616 1,563 3,270 187 3,457 3,504 1,134 857 - 1,991 167 2,158 2,339 The bank overdraft relates to US Dollars and kept for hedging purposes as at the year end. Interest is charged on overdrafts at 2.4% above the host countries currency base rate. The Group also has an invoice finance facility with its bankers. The bank overdraft and invoice finance facility are secured by a fixed and floating charge over the Group’s assets. The main terms of the convertible loan agreements with Sea Pearl Ventures Limited (who is a 17.4% shareholder in the Group) are: o March 2023 loan principal: £1,000,000 (unsecured) of which £1,000,000 drawn down in the year. o October 2023 loan principal: £1,000,000 (unsecured) of which £500,000 drawn down in the year. o Conversion if not repaid, on 30 September 2024. o Conversion price: 80% of the volume weighted average share price for the 3 months prior to conversion. o Interest: 7% per annum, payable as accrued on repayment and/or conversion. o Symphony able to repay the loans in full or in part before conversion at its discretion. The repayment dates have since been extended. See note 24, events since statement of financial position. The Group’s leasing activities are detailed in the table below: Right-of-use asset Head office Plant & Machinery Office equipment Office equipment Number of assets leased 1 1 1 1 Remaining term 1 year 3 years Ended in year 4 years The weighted average discount rate on initial application was 4.5%. None of the above remaining leases has a remaining option extension, option to purchase or termination option except for the new plant and machinery lease for £60,000 which was entered into which has an option to purchase. The office equipment asset under the lease that ended in the year was purchased at no additional cost. Symphony Environmental Technologies plc Annual Report and Accounts 2023Notes to the Annual Report and Accounts Continued The maturity of lease liabilities are as follows: Gross payments 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: Gross payments Lease capital Lease interest Total cash outflows Financial statements 65 2023 £’000 201 55 256 2023 £’000 174 17 191 2022 £’000 182 190 372 2022 £’000 167 22 189 Reconciliation of liabilities arising from financing activities For the year ended 31 December 2023 Gross payments Bank overdraft Invoice finance facility Convertible loan Leases Total liabilities from financing activities 1 January 2023 £’000 1,134 857 - 348 2,339 Cash flows £’000 (43) 5,686 1,500 (191) 6,952 Non-cash changes £’000 - (5,927) 63 77 (5,787) 31 December 2023 £’000 1,091 616 1,563 234 3,504 The non-cash changes for the invoice finance facility reflects customer receipts repaid directly to the bank. The non-cash changes for the lease pertain to a new lease addition of £60,000 and interest of £17,000. The non-cash changes for the convertible loan is an interest amount of £63,000. For the year ended 31 December 2022 Gross payments Bank overdraft Invoice finance facility Leases Total liabilities from financing activities 1 January 2022 £’000 677 - 505 1,182 Cash flows £’000 457 857 (189) 1,125 Non-cash changes £’000 31 December 2022 £’000 - - 32 32 1,134 857 348 2,339 The non-cash changes relate to a new lease addition of £22,000, the replacement of a £12,000 lease, and interest of £22,000. Symphony Environmental Technologies plc Annual Report and Accounts 2023Notes to the Annual Report and Accounts Continued 20. Trade and other payables Current Financial liabilities measured at amortised cost: Trade payables Other payables Social security and other taxes Accruals Financial statements 66 2023 £’000 1,158 35 136 396 1,725 2022 £’000 1,395 23 214 189 1,821 Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit period taken for trade purchases is 99 days (2022: 82 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. 21. Commitments and contingencies a) Capital commitments The Group had capital commitments totalling £nil at the end of the year (2022: £nil). b) Contingent liabilities Together with its subsidiary, Symphony Environmental Limited, the Group’s bankers have provided a Group composite facility of £10,000 and invoice finance facility of £1.5million (2022: £10,000 and £1.5 million). 22. Related party transactions Alexander Brennan was a member of the Board as an executive director until 11 August 2023. The Group was employing the services of a company which he is a shareholder and director, Brennan and Partners Limited. While Alexander Brennan was a member of the Board, the Group has paid £84,600 to Brennan and Partners Limited (2022: £89,400) for advocacy and other advisory services in relation to the Group’s d2w products in the UK, Spain and Latin America. The table below shows the inter company management charge and interest charge made by Symphony Environmental Technologies plc to Symphony Environmental Limited together with the end of year balance due from Symphony Environmental Limited to Symphony Environmental Technologies plc. Current Management charge for the year Interest charge for the year Inter company balance at the end of the year There were no other related party transactions during the year (2022: none). 2023 £’000 380 686 13,806 2022 £’000 348 469 11,513 Symphony Environmental Technologies plc Annual Report and Accounts 2023Financial statements 67 Notes to the Annual Report and Accounts Continued 23. 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 Leases 2023 £’000 1,511 90 1,123 2,724 1,158 35 396 1,091 234 2,915 2022 £’000 1,901 174 1,152 3,227 1,395 23 189 1,134 348 3,089 The Group’s £130,000 carrying investment in Eranova SAS see note 13, is held at fair value. Risk management 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 2023 is summarised as follows: Gross cash flows: Zero to sixty days Sixty one days to three months Four months to six months Seven months to one year One to three years Four to five years Trade and other payables and accruals £’000 1,589 - - - - - 1,589 Leases £’000 5 48 47 101 52 3 256 Bank overdraft & other loans £’000 1,091 - - - - - Total £’000 2,685 48 47 101 52 3 1,091 2,936 Symphony Environmental Technologies plc Annual Report and Accounts 2023Financial statements 68 Notes to the Annual Report and Accounts Continued The maturity of financial liabilities as at 31 December 2022 is summarised as follows: Gross cash flows: Zero to sixty days Sixty one days to three months Four months to six months Seven months to one year One to three years Four to five years Interest rate risk Trade and other payables and accruals £’000 1,607 - - - - - 1,607 Leases £’000 3 46 44 89 182 8 372 Bank overdraft & other loans £’000 1,134 - - - - - Total £’000 2,744 46 44 89 182 8 1,134 3,113 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 2023 is summarised as follows: Cash and cash equivalents Trade receivables Other receivables Trade payables Other payables Leases Bank overdraft Sensitivity: increase in interest rates of 5% Sensitivity: decrease in interest rates of 1% Fixed £’000 - - - - - - (234) - (234) - - Variable £’000 1,123 - - 1,123 - - - (1,091) 32 2 - The Group’s exposure to interest rate risk as at 31 December 2022 is summarised as follows: Cash and cash equivalents Trade receivables Other receivables Trade payables Other payables Leases Bank overdraft Sensitivity: increase in interest rates of 5% Sensitivity: decrease in interest rates of 1% Fixed £’000 - - - - - - (348) - (348) - - Variable £’000 1,152 - - 1,152 - - - (1,134) 18 1 - Sensitivity shows the effect on equity and statement of comprehensive income. Zero £’000 - 1,511 90 1,601 1,601 (1,158) (35) - 408 - - Zero £’000 - 1,901 174 2,075 (1,395) (23) - - 657 - - Total £’000 1,123 1,511 90 2,724 2,724 (1,158) (35) (234) 206 2 - Total £’000 1,152 1,901 174 3,227 (1,395) (23) (348) (1,134) 327 1 - Symphony Environmental Technologies plc Annual Report and Accounts 2023Financial statements 69 Notes to the Annual Report and Accounts Continued Currency risk The Group operates in overseas markets and is subject to currency exposure on transactions undertaken during the year. The Group hedges the transactions where possible by buying goods and selling them in the same currency. The Group also has bank facilities available for hedging purposes. A summary of foreign currency financial assets and liabilities as stated in the statement of financial position together with a sensitivity analysis showing the effect of a 10% change in rate with Sterling is shown below: Financial assets Financial liabilities Net balance Effect of 10% Sterling increase Effect of 10% Sterling decrease Financial assets Financial liabilities Net balance Effect of 10% Sterling increase Effect of 10% Sterling decrease Sterling balance 2023 £’000 Currency balance 2023 C’000 Sterling balance 2022 £’000 Currency balance 2022 C’000 Currency Euro Euro Euro USD USD USD 39 (21) 18 1,968 (879) 1.089 €45 €(24) €21 (2) 2 $2,506 $(1,104) $1402 (88) 134 235 (98) 137 1,943 (1,018) 925 €266 €(111) €155 (12) (15) $2,695 $(1,232) $1,463 (110) 134 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. Credit risk The Group’s exposure to credit risk is limited to the carrying value of financial assets at the statement of financial position date, summarised as follows: Gross payments Trade receivables Other receivables Cash and cash equivalents 2023 £’000 1,511 90 1,123 2,724 2022 £’000 1,901 174 1,152 3,227 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 81% (2022: 82%) 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 16. Symphony Environmental Technologies plc Annual Report and Accounts 2023Financial statements 70 Notes to the Annual Report and Accounts Continued 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 18 and interest bearing loans and borrowings as detailed in note 19. 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 18. The Group’s capital management objectives are: o to ensure the Group’s ability to continue as a going concern; and o 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 2023 and 2022 were as follows: Total borrowings (note 19) Cash and cash equivalents (note 17) Net debt Total equity (note 18) Borrowings Overall financing Gearing ratio 2023 £’000 3,504 (1,123) 2,381 (400) 2,381 1,982 120% 2022 £’000 2,339 (1,152) 1,187 1,703 1,187 2,890 41% The gearing ratio for 2023 is high due to the low balance sheet total. Within net debt is £1,563,000 representing convertible loans which can be repaid in equity in accordance with the terms. See Note 19. If converted this would reduce the gearing ratio to 40% which is in line with management’s working capital financing strategy. 24. Events since statement of financial position date On 13 March 2024 the conversion dates of the convertible loans with Sea Pearl Ventures Limited (see note 19) has been extended by 15 months from 30 September 2024 to 31 December 2025. On 24 March 2024 the Group raised £1.4 million of equity by subscription and retail offer. There have been no other material events since the statement of financial position date. 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’) Symphony Environmental Technologies plc Annual Report and Accounts 2023Financial statements 71 Company statement of financial position at 31 december 2023 Company number 03676824 Fixed assets 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 26 27 28 30 2023 £’000 1,386 1,386 4,558 762 5,320 1,684 3,636 5,022 1,848 4,854 (1,680) 5,022 2022 £’000 1,309 1,309 6,929 729 7,658 110 7,548 8,857 1,848 4,854 2,155 8,857 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 2023. The loss after tax for the financial year 2023 within the annual report and accounts of the Company was £3,912,000 (2022: loss £684,000). These annual report and accounts were approved by the Directors on 6 June 2024 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. Symphony Environmental Technologies plc Annual Report and Accounts 2023Financial statements 72 Company statement of changes in equity for the year ended 31 december 2023 For the year to 31 December 2023 Balance at 1 January 2023 Share option reserve movement Transactions with owners Total comprehensive income for the year Balance at 31 December 2023 For the year to 31 December 2022 Balance at 1 January 2022 Share option reserve movement Issue of share capital Transactions with owners Total comprehensive income for the year Share capital £’000 Share premium £’000 1,848 4,854 - - - - - - 1,848 4,854 1,793 3,910 - 55 55 - - 944 944 - Balance at 31 December 2022 1,848 4,854 The accompanying notes form an integral part of these annual report and accounts. Retained earnings £’000 2,155 77 77 (3,912) (1,680) 2,720 119 - 119 (684) 2,155 Total equity £’000 8,857 77 77 (3,912) 5,022 8,423 119 999 1,118 (684) 8,857 Symphony Environmental Technologies plc Annual Report and Accounts 2023  Financial statements 73 Notes to the Company statement of financial position 25. 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. 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 international accounting standards in conformity with the requirements of the Companies Act 2006 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: o the requirements of IAS 7 Statement of Cash Flows o the requirements of IFRS 7 Financial Instruments: Disclosures o the requirements of paragraphs 91-99 of IFRS 13 Fair Value Measurement o the requirement in paragraph 38 of IAS 1 ‘Presentation of Financial Statements’ to present comparative information in respect of: o paragraph 79(a)(iv) of IAS 1; o paragraph 73(e) of IAS 16 Property, Plant and Equipment; o paragraph 118(e) of IAS 38 Intangible Assets; o 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 o the requirements of paragraphs 30 and 31 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors o the requirements of paragraph 17 of IAS 24 Related Party Disclosures o 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 o 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. 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 statement of financial position 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. Symphony Environmental Technologies plc Annual Report and Accounts 2023Financial statements 74 Notes to the Company statement of financial position Continued Foreign currencies Monetary assets and liabilities in foreign currencies are translated into Sterling at the rates of exchange ruling at the statement of financial position 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 statement of financial position. 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 Equity comprises the following: o “Share capital” represents the nominal value of equity shares; o “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 o “Retained earnings” gains and losses arising from amounts recognised in profit or loss and the fair value of options granted under the Group’s share-based payment schemes. Equity-settled share-based payments Options granted to employees which relate to salary sacrifices of employees employed by this company are attributed a air value by reference to the services provided. This fair value is charged to statement of comprehensive income over the vesting period when the service is provided with a corresponding credit taken to shareholders’ funds. Significant judgements and estimates Preparation of the annual report and accounts requires management to make significant judgements and estimates. The items in the parent company annual report and accounts where these estimates have been made include: Estimates - Impairment of investments An impairment loss is recognised for the amount by which the assets or cash, generating unit’s carry 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 operation 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. See note 26 for the carrying value. Estimates expected credit losses in amounts due from group undertakings In line with IFRS 9, the Company uses an expected credit loss model to determine the provision for specific provisions for balances for which it has specific concerns over recoverability. The expected credit loss model estimates expected future cash flows 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. Symphony Environmental Technologies plc Annual Report and Accounts 2023Financial statements 75 Notes to the Company statement of financial position Continued 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. An impairment of £4,654,000 has been recognised during the period. See note 27 for the carrying value. The above can be sensitised as follows: o A 25% reduction in revenues growth going forward would increase the impairment by £530,000. o A 1% increase in the discount rate would increase the impairment by £260,000. There are no items in the parent company annual report and accounts where judgements have been made. 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. The ECL balance is reconciled as follows: Brought forward Increase in ECL Carried forward 2023 £’000 4,601 4,654 9,255 28. Trade and other payables: amounts falling due within one year Shares in Group Undertaking Total 2,309 Trade payables Accruals Convertible loans 2023 £’000 49 72 1,563 1,684 2022 £’000 3,394 1,207 4,601 2022 £’000 47 63 - 110 26. Investments Cost At 1 January 2023 Additions - share option expense (note 18) At 31 December 2023 Impairment At 1 January 2023 At 31 December 2023 Net book value At 31 December 2023 At 31 December 2022 2,309 77 2,386 1,000 1,000 1,386 1,309 Group undertakings are detailed in note 13. 27. Trade and other receivables Amounts owed by Group undertakings VAT Prepayments 2023 £’000 4,550 6 2 4,558 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 £9,255,000 (2022: £4,601,000). 77 2,386 1,000 1,000 1,386 1,309 2022 £’000 6,912 10 7 6,929 The main terms of the convertible loan agreements with Sea Pearl Ventures Limited (who is a 17.4% shareholder in the Company) are: o March 2023 loan principal: £1,000,000 (unsecured) of which £1,000,000 drawn down in the year o October 2023 loan principal: £1,000,000 (unsecured) of which £500,000 drawn down in the year o Conversion if not repaid, on 30 September 2024 o Conversion price: 80% of the volume weighted average share price for the 3 months prior to conversion o Interest: 7% per annum, payable as accrued on repayment and/or conversion o Symphony able to repay the loans in full or in part before conversion at its discretion The repayment dates have since been extended. See note 32, events since statement of financial position. Symphony Environmental Technologies plc Annual Report and Accounts 2023Financial statements 76 Notes to the Company statement of financial position Continued 29. Contingent liabilities The Company has guaranteed all monies due to its bankers by Symphony Environmental Limited. At 31 December 2023 the net indebtedness of this company amounted to £1,346,000 (2022: £1,571,000). The Company has guaranteed the lease rental payable by Symphony Environmental Limited in respect to the Group’s head office in Borehamwood amounting to £171,000 as at 31 December 2023 (2022: £342,000). 30. Share capital The Company’s share capital is detailed in note 18 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 2023 No. 3 2023 £’000 44 2 46 2022 No. 4 2022 £’000 58 3 61 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. 32. Events since statement of financial position date On 13 March 2024 the conversion dates of the convertible loans with Sea Pearl Ventures Limited (see note 28) have been extended 15 months from 20 September 2024 to 31 December 2025. On 24 March 2024 the Group raised £1.4 million of equity by subscription and retail offer. There have been no other material events since the statement of financial position date. Symphony Environmental Technologies plc Annual Report and Accounts 2023 Symphony Environmental Technologies plc Annual Report and Accounts 2023 Company Information overview overview 77  solicitors Eversheds Sutherland (International) LLP 1 Wood Street London EC2V 7WS  Auditor Forvis Mazars LLP Chartered Accountants and Statutory Auditor The Pinnacle 160 Midsummer Boulevard Milton Keynes MK9 1FF  Registrars Link Group Central Square 29 Wellington Street Leeds LS1 4DL  company registration number 03676824  Registered office 6 Elstree Gate Elstree Way Borehamwood Hertfordshire WD6 1JD  directors Michael Laurier Chief Executive Officer Ian Bristow FCCA Chief Financial Officer Michael Stephen LL.M Commercial Director & Deputy Chairman Nicolas Clavel Non-Executive Director & Chairman Michael Kayser Independent non-executive director  secretary Ian Bristow  nominated adviser and joint broker Zeus Capital Limited 125 Old Broad Street London EC2N 1AR  Bankers HSBC Bank Plc 103 Station Road Edgware Middlesex HA8 7JJ Symphony Environmental Technologies plc Annual Report and Accounts 2023 

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