This month our search for an exceptional RNS statement has landed on one of the companies we have previously featured in Aimzine, Symphony Environmental. At the time of writing Symphony’s shares are quoted at 3.25 pence giving the Group a market capitalisation of £3.8 million.

On 8 April Symphony issued their results for the year to 31 December 2008. These showed revenue of £5.37 million and a pre-tax loss of £0.4 million. The profit after tax was £0.37 million after the recognition of a £0.72 million tax credit. These results show a healthy improving trend but are not particularly exceptional. However, what caught our eye was the outlook statement which we reproduce in full below:

Outlook

‘With a strong distribution network and brand, low costs and a developing global need to resolve the issues of plastic pollution, we believe that 2009 will show further positive results. Our markets are underpinned by an increasingly strong legislative background which continues to support a need for our products.

Our financial aim in the short term is to reduce the Group’s interest burdened debt. Our commercial aim is to have a distributor in every country where sales would be worthwhile.

Current trading is ahead of our expectations. We are also confident of the future trading performance and have therefore recognised a £0.72 million deferred tax asset in the 2008 results.

We look forward with confidence to a year of further financial improvements.’

At the time of writing this statement, the most recently published analyst forecast for Symphony indicated a profit for the current year of £0.74 million and earnings per share of 0.60 pence – indicating a p/e of just over 5. Assuming that the directors are working to a similar forecast, the current year could be very profitable for Symphony.

Significant Turning Point

On the morning the results were issued I spoke to Symphony’s CEO, Michael Laurier and Finance Director, Ian Bristow. These directors were very keen to stress that these results marked a significant turning point for Symphony. For the first time they have reported a post tax profit and, significantly, they are now able to anticipate reducing debt during the current financial year. Michael Laurier confirmed to me that Symphony is not looking to raise further capital at this time.

During the year Symphony have increased the number of distributors for its d2w product from 15 to 45. The full effect of this increase will be seen in the current year.

Ian Bristow underlined the comment in the Chief Executive’s statement that the increase in turnover and in the number of distributors has been achieved without increasing costs.

The results statement referred briefly to Symphony’s ‘Rupert’ (RUbber Product Enhanced Recovery Technology) project: ‘Work continues on the RuPERT project with the aim to commercialise any resultant elements of this project at the earliest opportunity. The Group absorbs costs of £0.20 million per annum on this project and the result for 2008, a loss of £0.13 million, includes the receipt of a grant.’  I was told that work will continue on this project during 2009 with costs being absorbed as in 2008. There are no plans to raise further capital for this project and there could be further news on Rupert in the not too distant future.

Comment

Symphony has disappointed in the past and this must be holding the share price back. However, on the face of it, it appears that here we have a group in a seemingly high growth business just turning into profit.  We leave our readers to judge whether this is fully reflected in the share price today. Read the January Aimzine article on Symphony Environmental here.

STOP PRESS: I have started a Topic on Aimzine Social for 'Snippets' where I have added an additional comment regarding Symphony.

the current year could be very profitable for Symphony

Written by Michael Crockett

Copyright Aimzine Ltd

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The author of this article owns shares in Symphony Environmental

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