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SYMPHONY ENVIRONMENTAL TECHNOLOGIES PLC ANNUAL REPORTS AND ACCOUNTS 2018 AND ACCOUNTS REPORTS ANNUAL PLC TECHNOLOGIES ENVIRONMENTAL SYMPHONY 2018 AND ACCOUNTS REPORTS ANNUAL PLC TECHNOLOGIES ENVIRONMENTAL SYMPHONY ANNUALANNUAL REPORT REPORT ANDAND ACCOUNTS ACCOUNTS SymphonySymphony Environmental Environmental Technologies Technologies plc plc 20182018 SYmpHONY Develops anD proDuces A wiDE range OF tecHnologies, to MAKE plastic SMarter Plastic litter is a worldwide problem in terrestrial BUSINESS REVIEW and marine environments in particular, where a 01 Highlights 2018 staggering 8 million tonnes of plastic litter ends up each year with devastating consequences for wildlife 02 Symphony at a Glance and environmental quality. 04 Chairman’s Statement Symphony are committed to helping reduce 06 Chief Executive’s Review unnecessary plastic and re-using and recycling 10 2018 Roundup wherever possible, but, some plastic will always 11 Corporate Social Responsibilty escape collection and end up in the natural environment, where it could persist for 100 years. 12 Strategic Report Symphony’s d2w technology was invented - to make sure that if plastic does escape into the open CORPORATE GOVERNANCE environment it will biodegrade much more quickly than ordinary plastic. 13 Principal Risks and Uncertainties 14 Board of Directors Products made with d w have all the benefits of 2 16 Chairman’s Corporate conventional plastic that we have grown accustomed Governance Statement to, but with the added advantage that if they escape collection and end up in the natural environment 24 Directors’ Report as litter they will degrade and biodegrade (i.e. be 26 Directors’ Responsibilities Statement bio-assimilated by bacteria and fungi) on land 27 Audit Committee Report or sea in the same way as nature’s wastes. 28 Remuneration Committee Report In addition to d2w we have a range of protective technologies marketed under the d2p (designed to protect) logo. FINANCIAL STATEMENTS 30 Independent Auditor’s Report This year has seen several new commercial 33 Consolidated Statement of applications for d2p technologies. These include a range of products for the health and hygiene Comprehensive Income market, a complete antimicrobial toothbrush, and 34 Consolidated Statement of Financial Position insoles for trainers and running shoes incorporating 35 Consolidated Statement of Changes in Equity antimicrobial and odour-adsorbing technologies. 36 Consolidated Cash Flow Statement Our products are sold through a network of 37 Notes to the Annual Report and Accounts distributors in nearly 100 countries worldwide. 58 Company Statement of Financial Position 59 Company Statement of Changes in Equity 60 Notes to the Company Statement of Financial Position 64 Company Information HIGHLIGHTS 2018 Financial Highlights: Group revenues increased by Adjusted EBITDA, before R&D, Cash used in operations 6.5% to £8.80 million and planned increased marketing, £1.01 million (2017: £8.27 million) communications and brand costs of (2017: cash generated £1.03 million) £1.18 million d2p revenues increased by Net current assets increased to 191% to £0.93 million (2017: £1.20 million) £1.71 million 2017: £0.32 million) Reported profit before tax fell to (2017: £1.25 million) £0.04 million d2w revenues were broadly stable at £7.67 million (2017: £0.43 million) (2017: £7.78 million) Basic earnings per share fell to Gross profit increased by 0.03p 2.8% to £4.13 million (2017: 0.28p) (2017: £4.01 million) Business Highlights: Ten governments globally have mandated that certain plastic products must contain oxo-biodegradable additives; a regulatory move which is beneficial to the Group’s business A further nine countries have introduced positive regulation for all types of bio-degradable packaging with more countries intending to make similar changes Increasing interest in d2w type products as a result of Middle East regulations and enforcement thereof First d2p anti-insect technology commercial order Eranova (plastic from algae) due-diligence and commercial discussions ongoing 01 SYmpHONY at A glance AN international GROUP, with presence in nearlY 100 countries world wide A scientifically proven biodegradable technology The addition of d2w converts ordinary polymer (at the end of its useful life and in the presence of oxygen) into a material which is biodegradable in the open environment. d2w is a masterbatch that is added to polymer during manufacture. Added at only 1% means little or no extra cost d 2w has the same characteristics as conventional polymer. It is just as waterproof, lightweight, strong and flexible Products can be made in existing plastic factories with existing workforce and machinery M eets all relevant standards i.e. ASTM D6954, UAE 5009:2009 Saudi 2879 and AFNOR Accord T51-808 Will remain stable in storage conditions for the agreed shelf life Is safe for direct food contact according to US and EU food contact regulations Can be recycled with conventional plastic If products made with d2w end up in the open environment Straws made with as litter, they will harmlessly degrade and biodegrade oxo-biodegradable plastic www.d2w.net 02 BUSINESS REVIEW d2p is the brand name for a suite of masterbatches offering extra protection to plastic products from bacteria, insects, fungi, algae, odour, fouling and fire. Antibacterial Oxygen Scavenger GOVERNANCE CORPORATE Fights healthcare and food industry d2p OS is a powerful inorganic infections. Tested against dangerous chemical compound, produced organisms including MRSA, E-coli, from a natural ore and Listeria, Salmonella, Pseudomonas manufactured to a high purity. and Aspergillus Niger. Flame retardant Natural Flame retardants decrease the Antibacterial suitable for use in ignitability of materials and inhibit food and non-food applications. the combustion process – limiting In compliance with FDA Food and the amount of heat released. Drug Administration, USA and Vapour corrosion inhibitor FINANCIAL STATEMENTS EFSA (European Food Safety d p VCI additives are a range of Authority) requirements. 2 products to be used in protection Antimicrobial of surfaces against the corrosion The primary purpose is to prevent ands oxidation of ferrous and bacterial and fungal contamination non-ferrous metals. Protector toothbrush made with whilst preserving the aesthetic d2p antimicrobial technology. Ethylene adsorber Business Dynamics (Pakistan) and functional properties of the Highly active adsorbent plastic article. masterbatch for the removal Anti-fouling of undesirable odours, volatile Anti-fouling paint is a specialised organic compounds (VOC) coating applied to the hull of a ship and water vapour from plastic or boat to reduce the growth of packaging to reduce spoilage aquatic organisms. of fruit and vegetables. Insecticide technology Odour adsorber Insecticidal plastic masterbatches Inorganic masterbatches and used to control pests. Typically additives designed to inhibit the used in mosquito nets, agriculture, development of odours in plastic horticulture, forestry and home products and reduce spoilage of applications. fruit and vegetables. Pest control Release agent Rodents can cause dangerous A modern synthetic product damage to plastic products such as produced from one of the most Comfosole Insoles - made with cable insulation, warehouse pallets, common of the earth’s elements. It antimicrobial and odour-adsorbing non-food packaging and boxes etc. plays a key role in the improvement technologies. CPST (Korea) Symphony has developed additive of the flow and processing of resins masterbatches with products that as well an enhancing the slip and repel these pests. lubricity of plastic products. www.d2p.net 03 CHairman’S Statement Nirj Deva, DL, FRSA, MEP I am pleased to report on the continued progress of the Group. Our strategy remains unchanged, with the objective of expanding our product range with synergistic technologies which can be offered to the same or a similar customer base. This continues to progress well with Group revenues for the year increasing by 6.5% to £8.80 million (2017: £8.27 million) due to a 191% growth in d2p “designed to project” business from £0.32 million to £0.93 million. "THE worlD is retHinKing THE waY plastic is proDuceD, useD anD DisposeD of" We have developed a strong distribution network with 72 distributors worldwide, covering nearly 100 countries; this represents an important asset for the Group to leverage. In addition, Symphony’s products are manufactured in four different locations worldwide, enabling us to meet almost unlimited demand without significant further investment. During the year, our R&D spend increased modestly from £0.63 million to £0.66 million. This included specialist advice in relation to regulatory compliance in the United States for two of our d2p technologies, together with continued development in-house and utilisation of specialist third-party facilities of our other d2p technologies globally. We have developed a strong and growing range of d2p products which provide protection against bacteria, fungi, insects, corrosion, odours, and fire. Further to the growth already established, we believe that d2p will deliver strong growth in the short to medium term. Cash used in operations of £1.01 million (2017: cash Symphony distributors Amir Younus and Jihad Ghanem generated £1.03 million) was a result of a £1.22 million at the launch of the ‘Protector’ Antimicrobial toothbrush range increase in receivables during the period due to final in November 2018 quarter trade weighted