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AIM-listed advanced plastics technologies company Symphony Environmental (LSE:SYM) has today announced that “revenues for the month of December were significantly less than anticipated on 5 December and as such the trading loss for the year will be materially higher than £1.1 million (previously expected)”. Unusually, the shares are currently trading slightly higher, at 3.5p, on the back of today’s announcement – though this represents a sharp decline from the 20.875p share price hit in April 2011. The following reviews today’s statement…
Symphony has reported that 2012 revenues were approximately £4.9 million (2011: £8.5 million), with £2.8 million of this generated in the second half of the year (second half 2011: £4.7 million). This follows the company having significantly tightened its working capital cycle in order to reduce debtor exposure and stock held in its distributor network and it adds there was “a delay in shipments to some existing territories around the year end period” in addition to “delays to a number of new large potential territories from which initial d2w® additive sales were expected”. It updated that initial shipments for the new territories are now expected during the current quarter and that it has now received initial orders from three of the new territories with “positive indications” of interest for future sales, albeit the timing is not yet confirmed.
However, similar positive sentiments were uttered in the company’s 5th December update but clearly did not materialise in December. Today thus adds to a recent track record of disappointment and the market is resultantly not likely to look particularly favourably on this company until it provides some consistent delivery.
Despite reporting a £0.655 million loss at the interim stage, £1.15 million of ‘trade and other receivables’ collected helped the company actually generated net cash from operations during that period and it ended it with net current assets of £1.86 million and just £26,000 of non-current liabilities. Also, following the 5th December announcement directors of the company spent nearly £15,000 in total buying shares in the market at 4p or more, taking total directors’ shareholdings to 18,105,742 shares (14.16% of the issued share capital).
This has undoubtedly been a disappointment since I started following this company a few years ago and I apologise to those that are in here at higher prices thanks to me. However, with the market cap now sub £4.5 million, I believe it is still probably worth hanging on as there continues to look to be good potential in the company’s controlled-life plastic technology (which enables plastic to be ‘bioassimilated’ in the open environment). From here however Symphony will have to execute much better and consistently so to inspire a material re-rating. But given its operational gearing IF it can deliver on its pipeline for once there is no reason why it could not deliver a 7 figure profit this year which would make the current rating look miserly. At worst a hold.
Tom Winnifrith writes for 10 US and UK websites. Links to all his works as well as his original content can be found at his own website TomWinnifrith.com – you can get alerts on all his articles by following him on twitter @tomwinnifrith
