SYM (Symphony Environmental Tech) was founded in 1995, specialising in the procurement and distribution of polythene bags, sheet, film and other related products in the UK in particular. Towards the end of 1997, the Group realised the need for, and worldwide market potential of, plastic which could be made biodegradable. Symphony started to market biodegradable plastics under licence.
Sounds like a reasonably simple business.
Here’s the problem(s). SYM has only had positive cashflows in 2 of the last 10 years. It only has positive free cashflows in one year. Why is such a seemingly mundane business so unprofitable? A poster on ADVFN sums things up for me:
Time has told. They’ve been [expletive deleted] around with this for 15 years.
"In commercial terms, 2011 was our most successful year…" – says Michael Laurier. In the Report and Accounts, every measure of profit is worse than last year.
Shares have fallen 70% over 10 years (Footsie up 125), but risen 29% over 5 (Footsie down 10%). Revenue has doubled from 4m to 8.5m over 10 years, but the number of shares has ballooned from 31.6m to 127.9m during that period. On a revenue per share basis, it has gone from 12.7pps to 6.6pps over a decade. Revenue per share has been significantly lower in the last 5 years of the decade compared with the former half.
SYM has a market cap of £10.2m, a PER of 14.7, and has never paid a dividend.
YTD, SYM is up 29%, so there’s clearly been some momentum behind it lately – although this was mostly during Feb.
There’s an interesting RNS on 22-Mar-2012:
[SYM] is very pleased to announce the signing in Hong Kong of a 20 year exclusive distribution agreement for the People’s Republic of China … between its wholly-owned subsidiary Symphony Environmental Ltd and the newly-formed Super Success International Limited ("SSI"). … We are excited to be associated with Mr Wang Liming (Chairman of Dongguan Energy Saving and Environmental Protection Co. Ltd) who has formed SSI for the purpose of distributing d2w and d2detector in China. Super Success International is a newly formed company that was created by Mr Wang Liming.
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