Symphony Environmental Technologies describes itself as a global specialist in technologies that make plastic smarter. Given the intensifying focus on environmental issues and the importance which many investors are now placing on this area, this is a company which could see its shareholder base grow considerably in the coming years. There is still a lot of work still required but the share price has slipped back recently and recovery may well be on the cards.
The AIM-listed company has developed a range of additives, concentrates and master-batches which are marketed under its d2p trademark. These can be incorporated into products to provide protection against microbes, insects and rodents, as well as against fire. Other d2p products include odour, moisture and ethylene adsorbers and other food-preserving technologies. Anti-microbial household gloves and toothbrushes are already being produced and other d2p finished products are being developed for retail sale. A biodegradable plastic technology, which helps tackle the problem of microplastics by turning ordinary plastic into biodegradable materials after use, continues to be developed and the technology is branded d2w. This means a plastic can be bioassimilated in the open environment in a similar way to a leaf. In some countries, such as Saudi Arabia, Jordan, Bahrain and the UAE, oxo-biodegradable plastic is mandatory. The d2Detector, a portable device which analyses plastics and detects counterfeit products, has also been developed and d2t tagging and tracer technology is available for further security.
Final results for 2020 were released at the end of March. Group revenues were £9.77m (2019: £8.22m) and gross profit £4.11m (2019: £3.78m). The reported loss before tax was £0.44m (2019: £0.70m) and basic loss per share 0.19p (2019: 0.41p). Cash used in operations increased to £1.44m (2019: £0.73m) but net current assets improved to £3.63m (2019: £2.85m). Net cash was £0.47m as at 31 December 2020 versus £0.88m a year earlier.
The company is taking legal action against the Commission, Parliament and Council of the EU. All costs of preparing the case have already been paid and any significant further costs would only be incurred if the action went to trial. An update was anticipated from the company after 14 April, once its legal team has evaluated the defences, so news on this could come at any time. Regardless of the outcome, this issue is a distraction and clarity is likely to be welcomed by the market. The company has a lot of potential and is poised to move into profitability if revenues can be driven modestly higher. Our share tip is SPECULATIVE BUY.
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