Symphony Environment warns on revenues and profit

Shares in Symphony Environment lost a quarter of their value on Wednesday after the plastics technologies supplier admitted revenues for the financial year will be 'substantially lower' than both the previous year and market expectations.

The main reason for the decline is a decrease of around 30% in d2w additive sales after a number of new large potential territories from which d2w sales were expected were delayed. In the last financial year turnover totalled £8.5m.

A trading loss of around £1.1m is now expected in the current financial year, the firm said, compared to a profit of £0.5m in 2011.

More positively, the company said it has now received initial orders from some of the territories and has received positive indications of interest for future sales, although the timing is not yet known.

In a statement the company said: "As detailed in the interim statement published on September 27th, the first half of the year saw our operating policies change in order to reduce debtor exposure and stock held by our distributor network. For the second half of the year we continued this policy which resulted in lower stocks within the network and much reduced trade receivables.

"This policy has resulted in an improved working-capital cycle and reduced exposure to possible credit risk which we anticipate will be reflected at the year end. The effect of this policy has been to exacerbate the fall in sales although from November revenues reverted to an operating level that would be similar to 2011.

"During the year the group continued to make substantial R&D investment in future product-lines for d2w, d2p and d2t, as well as in Symphony Recycling Technologies. The group anticipates being able to continue those developments in 2013. The group are working towards showing revenue streams for these developments as soon as practicable, and some may begin during 2013."

The group added that it has sufficient cash-flow and trading facilities to enable substantial business growth going forward.

Company reveals "advanced negotiations"Symphony also revealed that it is in "advanced negotiations" with a "global pharmaceutical company", which it said may lead to the granting of substantial distribution rights to the group for what is believed to be a unique plastic masterbatch.

"With the current improved monthly trading position, the group is confident of a stronger performance going forward," the firm added.

The share price fell 25% to 3.0p by 09:50.

NR