"Smarter plastic" products developer Symphony Environmental Technologies plc (LON:SYM) moved into the black last year.
The company, which specialises in making plastic products more environmentally friendly, had signalled back in January that it had moved into profit, and confirmed it this morning, announcing a profit of £123,000 for 2016, versus a loss the year before of £2.3mln.
Basic earnings per share of 0.11p marked a sharp reversal from a loss per share of 2.26p in 2015, and were ahead of market expectations of earnings per share of close to zero.
Revenues increased 6.8% to £6.8mln from £6.37mln, which contributed to the move into the black, but the company said the key factor was a reduction in overheads.
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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 and Euro currencies.
The group’s primary selling currency is the US dollar, whereas it reports its results in sterling, so it has benefited from the pound’s post-Brexit plunge.
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 alluded to above.
At the end of 2016 the group had net cash of £260,000, up from £120,000 the previous year.
“Our expectations for the short term are that more countries outside Europe will pass legislation in favour of a d2w-type oxo-biodegrading plastic solution, and that other countries who already have legislation will progress their enforcement programmes. If these expectations are met, then this should lead to an increase in demand for our d2w products,” said Michael Laurier, chief executive of Symphony.
The group has more than 100 customer-led development projects on the go using its d2p “designed to protect” technology, setting a good foundation for further increases in revenue and profitability.
“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,” Laurier said.
House broker Cantor Fitzgerald said the results were good news but with profitability still at a very low level it is not the main argument for investing.
"Recent announcements of product launches incorporating its d2p additives are likely to be far more significant in the long term since they mark the beginning of the commercialisation process for a wide range of products that the company has invested heavily in," Cantor said.
"We believe that our FY2017 forecasts could be subject to upwards revision depending on the progress of d2p commercialisation this year," it added.
Shares in Symphony were up 10% on the results.
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