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Symphony Environmental Technologies plc: THE INVESTMENT CASE

Saudi Arabia gives Symphony Environmental's future a big boost

"Ours is the only one that has been approved so far"
Plastic bags
INVESTMENT OVERVIEW: SYM The Big Picture
Must be biodegradable in Saudi now

Only 25% of plastic waste is currently recycled in Europe, with the rest going into landfill, burnt or just thrown away.

That is a statistic the EU wants to change by 2020 through higher use of recycling or bags that decompose, which is music to the ears of Symphony Environmental Technologies plc (LON:SYM).

But other countries aren't waiting for Europe to set the agenda.

Saudi Arabia has just legislated to make to make oxo-biodegradable plastic compulsory for a wide range of locally-manufactured and imported plastic products.

The products include carrier bags, packaging films, agricultural films, and many other types of plastic products.

Michael Laurier, Symphony’s chief executive, described the Saudi’s move as incredibly significant for Symphony as Saudi Arabia is the world’s largest oil producer and one of the largest plastics makers.

It has also just awarded Symphony a quality mark for its oxo-biodegradable aditive, d2W,  a requirement for its use in the country.

WATCH: Saudi switch to oxo-biodegradable plastic 'a major event' for Symphony Environment, says CEO

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“Most types of plastics now cannot be made unless they use oxo-biodegradable technology,” Laurier told Proactive "and ours is the only one that has been approved so far".

Moreover, it gives a lead to between 10-11 other countries planning similar action, Laurier believes.

D2W is an additive that allows the life of a plastic product to be controlled and degraded into other non-plastic materials. 

Countries realising action needs to be taken

Laurier said it is all a part of a major drive to reduce the environmental damage caused by plastics.

"The Saudi Arabian government has become the latest to understand the important role which oxo-biodegradable plastic can play in helping to protect the environment, whilst being fully consistent with a circular economy.” 

Symphony has yet to receive any orders for its d2w additive, but Laurier said the Gulf-based polymer industry is projected to grow by 6% per annum over the next five years, reaching 33.8mln tonnes by the year 2019 of which 21.6mln tonnes will come from Saudi Arabia.

Oxo-biodegradeable additives encourage oil–based plastic to decompose more easily in environments such as the sea.

Three main product areas

Symphony has three main product areas - oxo-biodegradeables (d2w) which are controlled life plastics; protective plastics (d2p) such as flame retardants, anti-microbial products and insecticides; and anti-counterfeiting (d2t) -  and there are signs that traction for them is growing.

The ‘smart plastics’ firm recently launched a range of water pipes incorporating its d2p antimicrobial technology in Pakistan.

The pipes, which are designed to be free from harmful bacteria and fungi, were launched in partnership with Pakistan-listed firm Dadex Eternit, with a joint sales team formed to market the product.

Meanwhile, the group also picked up its first order for its d2p anti-microbial plastics range with Wilko stores to stock its new anti-microbial household gloves.

In the black

Symphony, which had signalled back in January that it had moved into the black, confirmed at the start of March that it made a profit of £123,000 for 2016, versus a loss the year before of £2.3mln, with sales growing by 6.8% to £6.8mln, up from £6.37mln the year before.

The gross profit margin improved to 50.1% from 46.0% in 2015, driven mainly by a more profitable sales mix and the favourable currency movements.

At the end of 2016 the group had net cash of £260,000, up from £120,000 the previous year.

Sales of products using Symphony’s controlled life plastic technology – dw2 - continued to account for the greater part of turnover, with the majority exported outside Europe in US dollars and Euros.

Future fortunes

Wilko - one of the leaders housewares market with 397 stores currently nationwide - is the first major UK retailer to list Symphony's d2p innovative products, although as with most retail listings of new products, initial volumes are expected to be small with future revenues dependent on consumer take-up.

The group has more than 100 customer-led development projects on the go using its d2p “designed to protect” technology, providing a good foundation for further increases in revenue and profitability.

Laurier has said: “We expect to build on the positive momentum and are optimistic for a successful year ahead, in an environment that is becoming more receptive to our growing range of technologies and products."

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Plastic bags
April 19 2017
"Ours is the only one that has been approved so far"

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