27th Sep 2007 07:01
Symphony Environmental Tech. PLC27 September 2007 27 September 2007 SYMPHONY ENVIRONMENTAL TECHNOLOGIES PLC INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2007 Symphony Environmental Technologies plc ("Symphony" or "Group") the degradableplastics and waste-to-energy Group, announces its interim financial statementsfor the six months ended 30 June 2007. Highlights • Sales £1.7 million (2006 H1: £2.35 million) • Gross profit margins increase to 26% (2006 H1: 22%) • Loss before tax of £1.06million (2006 H1: loss £0.87m) • d2w(R) sales increase by 9% to £1.26million (2006 H1: £1.16million) After period end • Cost reductions, improved margins and working capital cycle • Major supplier converts debt to shares • Distribution network increases • Prof G Scott appointment as Chief Scientific Advisor • Restructuring completed and improved outlook Chairman's Statement The restructuring process reported on in our earlier communications completed atthe end of the period and much has been achieved in that time by refocusing theGroup's business. The change has removed a large part of the low margin, highvolume commodity carrier and refuse bags business and has positioned Symphony asa high-margin lower-cost additive technology provider. Recent changes to the management structure and operating personnel are having apositive effect on operations. The waste to energy side of the business is moving along at a satisfactory rateand we have nearly completed the feasibility study into converting waste tyresinto useful products. We will apply for a second UK Government grant this Autumnfor the construction of a commercial scale microwave pyrolysis plant combinedwith a system for reducing scrap tyres to rubber-crumb and clean steel. I look forward to the future with confidence. Contacts SymphonyMichael Laurier, CEO Tel: 020 8207 5900 Ian Bristow, FD Panmure GordonAndrew Godber Tel: 020 7459 3600 Stuart Gledhill Further information on the Symphony Environmental Technologies Group ofcompanies SYMPHONY ENVIRONMENTAL LTD is a world leader in oxo-biodegradable plastictechnology. The technology is recognisable by the d2w(R) droplet logo that nowappears on thousands of tonnes of oxo-biodegradable plastic products worldwide.Symphony develops and supplies environmentally-responsible d2w(R) pro-degradantadditives as well as d2w(R) oxo-biodegradable plastic film, and rigid packagingproducts. SYMPHONY ENERGY LTD is developing innovative waste-to-energy technology and isexploring many opportunities where there is a demand to convert plastics, tyresand other waste streams into valuable products by cost effective processes. SYMPHONY PLASTICS LTD has for many years supplied a popular range ofconventional plastic bags and other plastic packaging products. THE SYMPHONY GROUP has a diverse and growing customer base in the UK and hassuccessfully established itself as an international business after signingdistribution agreements with companies in Argentina, Australia, Brazil, Canada &USA, the Caribbean, Chile, Colombia, France, India, Mexico, New Zealand, Peru,Portugal, South Africa, Saudi Arabia, Uruguay and Qatar and other areas. Its d2w(R) products can already be found in more than 50 countries. Website: www.symphonyplastics.com Chief Executive's Review The period under review brought to an end the restructuring program that changedthe Group from a high-volume low-margin commodity business to a much leanerhigher margin environmental technology business. These results reflect the finalperiod of high costs for the business. We have continued to expand ourdistribution network in line with the new strategy and in particular, furtherdistributors have been appointed in Europe, Africa, the Far East and SouthAmerica. Investment in product testing and development has been maintainedtogether with further research and development programs within the waste toenergy business. Trading Results Revenue reduced by 28% to £1.70 million (2006 H1 £2.35 million) as a result ofthe implementation of the strategy changes leading to lower non-degradableproduct revenue. Gross profits decreased to £0.44 million (2005 H1: £0.53million) but gross margins have increased to 26% reflecting the gradual changein sales mix away from commodity products to technology. Operating lossesincreased to £1.06 million from £0.87 million. The loss per share has decreased to 1.33 pence (2006 H1: loss per share of 1.36pence). Cashflow Since April 2007 a cost reduction plan has been implemented which impacts on thesecond half of the year. The Group's improved working capital cycle based onhigher margin additive sales will also show its effect in the second half. To further assist working capital going forward the Group has completed thefollowing: - Convertible Loan The £500,000 HeadStart convertible loan facility announced on 15 December 2006has been amended. The remaining £200,000 will be drawn down and repayment hasbeen extended from 15 December 2007 to 27 September 2008 with the interest rateincreased to 10% from 8%. A further 600,000 warrants have been issued at a strike price of 4 pence. - Share capital One of the Group's major suppliers has converted part of its trading debt intoshares at 6 pence per share. 1.6 million shares have been issued equating to£96,000 of the debt. This is a major vote of confidence in the future ofSymphony from a trading partner who knows the business well. Management Since my last report I am pleased to welcome to the Board Michael Stephen asDeputy Chairman. The board now consists of three Executive Directors and two NonExecutive Directors. In line with our continuing focus on expanding the Research and Developmentcapabilities of the Group, I am pleased to advise that Professor Gerald Scotthas become our Chief Scientific Advisor for degradable polymers. Professor Scott(DSc (Oxon), C.Chem, FRIC, FIMMM) is Emeritus Professor of Chemistry and PolymerScience of Aston University, UK and is one of the world's leading polymerscientists. He was elected Fellow of the Royal Institute of Chemistry (now theRoyal Society of Chemistry) in 1973 and Fellow of the Institute of Materials in1978. He was awarded a Doctorate of Science by the University of Oxford in 1984 forhis dissertation "Antioxidants, their Mechanisms and Role in PolymerStabilisation" based on peer reviewed published papers. He was elected Fellow ofthe "Society of Creators" of the USSR Academy of Sciences, in 1976 for theinvention of biodegradable commodity plastics, and was elected Fellow of the"Materials Life Society" of Japan in 1984. He established an internationally recognised Centre for the study of PolymerDegradation and Stabilisation at Aston University in 1967. Over 500 technicalpapers have been published by Professor Scott with members of staff, researchfellows and students of this Group, initially in the field of polymerstabilisation and antioxidant mechanisms but increasingly from 1980 onwards inthe controlled biodegradation of commercial polymers. He is a member of the British Standards Institute's Packaging and theEnvironment Committee (PKW/0) concerned with the biodegradation of polymers inthe environment. He is the author of a new draft British Standard (BS 8472)dealing with the biodegradation and composting of oxo-biodegradable plastics. Heis also a member of PRI/82 Thermoplastic Materials Committee of BSI, andrepresents BSI on TC 261/SC4/WG2 Degradability and Organic Recovery of Packagingand Packaging Wastes Working Group and on TC 249/WG9 Characterisation ofDegradability Working Group of the European Standards organisation (CEN). Outlook The restructuring program has been completed and the Group is now moving into aperiod of lower operating cost and higher gross profit. The Group will continueto invest in technology and marketing advancements in all areas of the business. Our d2w(R) distribution network continues to grow, providing a much broader andcost effective method of expanding the sales reach without having to materiallyincrease direct cost. d2w(R) additive technology can be found in thousands oftons of finished products and in more than 50 countries. Further high profile brands are continuing to adopt d2w(R) degradable plasticsincluding the Disney Organisation, but due to commercial confidentiality we havenot been able to release all the names in this report. In France, AFNOR has this year published XP T 54-980-1 which is the firststandard to recognise criteria for oxo-biodegradable additives in applicationsfor agriculture and horticulture. The waste to energy business is moving along well and we are just finalising thefinal part of works relating to the grant that was awarded earlier in the year.As detailed in my report on 28 June, once we have completed the first stage ofthe grant we will apply for a design and construction grant to develop acommercial scale Pyrolysis plant. Costs attributable to the waste to energydivision for H1 were £100,000. Revenues are not expected before H2 2008. We look forward to the coming months with greater confidence. Michael Laurier Chief Executive Consolidated interim income statement 6 months to 6 months to 12 months to 30 June 30 June 31 December 2007 2006 2006 Unaudited Unaudited Unaudited £'000 £'000 £'000 Revenue 1,700 2,347 4,200 Cost of sales (1,257) (1,821) (3,362) --------------------- ---------- ---------- ----------Gross profit 443 526 838 Distribution costs (184) (68) (143)Administrative expenses (1,283) (1,302) (3,038) --------------------- ---------- ---------- ----------Operating result (1,024) (844) (2,343) Finance costs (36) (24) (37) --------------------- ---------- ---------- ----------Result for the period before tax (1,060) (868) (2,380)--------------------- ---------- ---------- ---------- Income tax credit - - 37 --------------------- ---------- ---------- ----------Loss for the period (1,060) (868) (2,343)--------------------- ---------- ---------- ---------- Basic and diluted earnings pershare (1.33)p (1.36)p (3.62)p All results are attributable to the parent equity holders Consolidated interim balance sheet At At At 30 June 30 June 31 December 2007 2006 2006 Unaudited Unaudited Unaudited £'000 £'000 £'000AssetsNon-currentProperty, plant and equipment 205 227 222Available for sale financial assets 531 16 531Intangible assets 123 17 70 ---------------------- --------- ---------- ---------- 859 260 823 CurrentInventories 347 169 545Trade and other receivables 883 2,061 897Cash and cash equivalents 51 91 215 ---------------------- --------- ---------- ---------- 1,281 2,321 1,657 ---------------------- --------- ---------- ----------Total assets 2,140 2,581 2,480---------------------- --------- ---------- ---------- EquityEquity attributable to shareholders ofSymphony Environmental Technologies plcShare capital 839 634 697Share premium account 12,392 10,824 11,392Other reserves 822 822 822Retained earnings (13,945) (11,459) (12,885) ---------------------- --------- ---------- ----------Total equity 108 821 26---------------------- --------- ---------- ---------- LiabilitiesNon-currentOther payables 460 - 447Interest bearing loans and borrowings 44 71 62 ---------------------- --------- ---------- ---------- 504 71 509 CurrentInterest bearing loans and borrowings 520 682 605Current tax payable - - -Trade and other payables 1,008 1,007 1,340 ---------------------- --------- ---------- ---------- 1,528 1,689 1,945 ---------------------- --------- ---------- ----------Total liabilities 2,032 1,760 2,454---------------------- --------- ---------- ---------- Total equity and liabilities 2,140 2,581 2,480 Consolidated interim statement of changes in equity Equity attributable to the equity holders of Symphony Environmental Technologiesplc: Share Share premium Other reserves Retained Total capital earnings equity £'000 £'000 £'000 £'000 £'000For the six monthsto 30 June 2007Balance at 1January 2007 697 11,392 822 (12,885) 26Net result forthe periodending (1,060) (1,060)Share based - -paymentsShares issued 142 1,000 1,142 ---------------- -------- -------- -------- -------- --------Balance at 30June 2007 839 12,392 822 (13,945) 108---------------- -------- -------- -------- -------- -------- For the six monthsto 30 June 2006Balance at 1January 2006 634 10,824 822 (10,617) 1,663 Net result forthe periodending (868) (868)Share basedpayments 26 26 ---------------- -------- -------- -------- -------- --------Balance at 30June 2006 634 10,824 822 (11,459) 821---------------- -------- -------- -------- -------- -------- For the year to 31December 2006Balance at 1January 2006 634 10,824 822 (10,617) 1,663 Net result forthe yearending (2,343) (2,343)Share basedpayments 75 75Shares issued 63 568 631 ---------------- -------- -------- -------- -------- --------Balance at 31December 2006 697 11,392 822 (12,885) 26---------------- -------- -------- -------- -------- -------- Consolidated interim cash flow statement 6 months to 6 months to 12 months to 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000 Operating activities Results for the period after tax (1,060) (868) (2,342) Equity settled share-based payment charge - 26 75 Interest expense 36 24 37 Depreciation 18 22 45 Amortisation 5 1 12 Loss on disposal 3 Change in inventories 198 135 (240) Change in trade and other receivables 14 712 1,875 Change in trade and other payables (121) (44) 220 ---------------------- --------- ---------- ---------- (907) 8 (318) Investing activities Additions to property, plant and equipment 17 - (12) Proceeds from disposals of property, plant and equipment 12 3 7 Additions of intangible assets (58) - (64) ---------------------- --------- ---------- ---------- (29) 3 (69) Financing activities Proceeds from loans - - 254 Repayment of loans (20) - - Discharge of finance lease liability (14) (17) (34) Proceeds from share issue 1,142 - 630 Interest paid (36) (24) (37) ---------------------- --------- ---------- ---------- 1,072 (41) 813 Net change in cash and cash equivalents 136 (30) 426 Cash and cash equivalents, beginning of period (96) (521) (521) ---------------------- --------- ---------- ---------- Cash and cash equivalents, end of period 40 (551) (96) ---------------------- --------- ---------- ---------- Notes to the interim financial statements 1 Nature of operations and general information Symphony Environmental Technologies plc and subsidiaries' ('the Group')principal activities include the development and supply of plastic degradableadditives and products, and the development of waste to energy systems. Symphony Environmental Technologies plc, a limited liability corporation, is theGroup's ultimate parent company. It is incorporated and domiciled in England.The address of its registered office is Elstree House, Elstree Way, Borehamwood,Hertfordshire, WD6 1LE, England. Symphony Environmental Technologies' shares arelisted on the AiM market of the London Stock Exchange and the PLUS market inLondon. These interim condensed consolidated financial statements are for the six monthsended 30 June 2007. They do not include all of the information required forfull annual financial statements, and should be read in conjunction with theconsolidated financial statements of the Group for the year ended 31 December2006. These interim condensed consolidated financial statements are presented inSterling (£), which is the functional currency of the parent company. The financial information set out in this interim report does not constitutestatutory accounts as defined in Section 240 of the Companies Act 1985. Thegroup's statutory financial statements for the year ended 31 December 2006,prepared under UK GAAP, have been filed with the Registrar of Companies. Theauditor's report on those financial statements was unqualified and did notcontain a statement under Section 237 (2) of the Companies Act 1985. 2 Accounting policies and changes thereto These consolidated interim financial statements are for the first period thatthe Group has applied International Financial Reporting Standards ('IFRS') asadopted by the EU and are effective at 31 December 2007 or are expected to beadopted and effective at 31 December 2007, our first annual reporting date atwhich we are required to use IFRS accounting standards adopted by the EU. Thechanges to accounting policies in respect to applying IFRS have no retrospectiveeffect on the results and equity of the Group. Consequently, these interimfinancial statements do not include reconciliations of equity and the incomestatements from UK GAAP to IFRS as at the date of transition (1 January 2006)and 31 December 2006 as there were no material items to report. The balance sheet has however been restated to show investments in otherundertakings as available for sale financial assets. The material asset withinthis category was fair valued on acquisition in the period to 31 December 2006and there has been no further material change to this fair value as at 30 June2007. These financial statements have been prepared under the historical costconvention, except for the revaluation of certain financial instruments. The group has taken advantage of the following exemptions from fullretrospective application of IFRS: (a) Business combinations exemption The group has not restated business combinations which took place prior to thetransition date. Accordingly the classification of the combination remains unchanged from thatused under UK GAAP. The assets, liabilities and other reserve are recognised atdate of transition if they would be recognised under IFRS, and are measuredusing their UK GAAP carrying amount. (b) Estimates Estimates at the date of transition are consistent with estimates made under UKGAAP as there is no objective evidence that those estimates were in error. As this report is for the first period of IFRS adoption, the full accountingpolicies of the Group under IFRS are shown below. The Group is not subject to material seasonal fluctuations. Business combinations completed prior to date of transition to IFRS The group financial statements consolidate the financial statements of thecompany and all subsidiary undertakings. The company was entitled to merger relief offered by section 131 of theCompanies Act 1985 in respect of consideration received in excess of the nominalvalue of the equity shares issued in connection with the acquisition of SymphonyPlastics Limited on 9 December 1999. This was accounted for under mergeraccounting under UK GAAP and has been treated in this manner under IFRS as thebusiness combination exemption has been adopted in these interim financialstatements. The merger accounting method requires assets and liabilities to notbe adjusted to fair value and the results of the subsidiary to be included as ifit had always been part of the group. Therefore the results of the groupincluded both the results pre and post-acquisition. The other reserve wasestablished as a result of this accounting method. Revenue Revenue is stated at the fair value of the consideration receivable and excludesVAT and trade discounts. Revenue is recognised when the significant risks and benefits of ownership ofthe product have transferred to the buyer, which may be based on shipment ordelivery depending upon the specific contract terms. Revenue from services provided by the company is recognised when the company hasperformed its obligations and in exchange obtained the right to consideration. Intangible assets - Research and development costs Expenditure on research (or the research phase of an internal project) isrecognised as an expense in the period in which it is incurred. Development costs incurred on specific projects are capitalised when all thefollowing conditions are satisfied: • completion of the intangible asset is technically feasible so that it will be available for use or sale • the group intends to complete the intangible asset and use or sell it • the group has the ability to use or sell the intangible asset • the intangible asset will generate probable future economic benefits. Among other things, this requires that there is a market for the output from the intangible asset or for the intangible asset itself, or, if it is to be used internally, the asset will be used in generating such benefits • there are adequate technical, financial and other resources to complete the development and to use or sell the intangible asset, and • the expenditure attributable to the intangible asset during its development can be measured reliably Development costs not meeting the criteria for capitalisation are expensed asincurred. The cost of an internally generated intangible asset comprises all directlyattributable costs necessary to create, produce, and prepare the asset to becapable of operating in the manner intended by management. The nature of theGroup's activities in the field of development work renders some internallygenerated intangible assets unable to meet the above criteria at present. Amortisation commences upon completion of the asset, and is shown withinadministrative expenses and is included at the following rate: Development costs d2w - 5 years straight line Careful judgement by the directors is applied when deciding whether therecognition requirements for development costs have been met. This is necessaryas the economic success of any product development is uncertain and may besubject to future technical problems at the time of recognition. Judgements arebased on the information available at each balance sheet date. - Trademarks Trademarks represent the cost of registration and are carried at cost lessamortisation. Amortisation is calculated so as to write off the cost of an asset, less itsestimated residual value, over the useful economic life of that asset asfollows: Trademarks - 10 years straight line Property, plant and equipment Property, plant and equipment are stated at cost, net of depreciation and anyprovision for impairment. Depreciation is calculated so as to write off the cost of an asset, less itsestimated residual value, over the useful economic life of that asset asfollows: Plant and machinery - 20% reducing balance Fixtures and fittings - 25% reducing balance Motor vehicles - 20% reducing balance Office equipment - 25% straight line Impairment testing of intangible assets and property, plant and equipment For the purposes of assessing impairment, assets are grouped at the lowestlevels for which there are separately identifiable cash flows (cash-generatingunits). As a result, some assets are tested individually for impairment and someare tested at cash-generating unit level. Intangible assets with an indefiniteuseful life, and those intangible assets not yet available for use are testedfor impairment at least annually. All other individual assets or cash-generatingunits are tested for impairment whenever events or changes in circumstancesindicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's orcash-generating unit's carrying amount exceeds its recoverable amount. Therecoverable amount is the higher of fair value, reflecting market conditionsless costs to sell, and value in use based on an internal discounted cash flowevaluation. All assets are subsequently reassessed for indications that animpairment loss previously recognised may no longer exist. Inventories Inventories are valued at the lower of cost and net realisable value, aftermaking due allowance for obsolete and slow moving items. Cost is determined onthe basis of purchase value on a first-in first-out basis. Leased assets In accordance with IAS 17, the economic ownership of a leased asset istransferred to the lessee if the lessee bears substantially all the risks andrewards related to the ownership of the leased asset. The related asset isrecognised at the time of inception of the lease at the fair value of the leasedasset or, if lower, the present value of the minimum lease payments plusincidental payments, if any, to be borne by the lessee. A corresponding amountis recognised as a finance leasing liability. The interest element of leasingpayments represents a constant proportion of the capital balance outstanding andis charged to the income statement over the period of the lease. All other leases are regarded as operating leases and the payments made underthem are charged to the income statement on a straight line basis over the leaseterm. Lease incentives are spread over the term of the lease. Pension costs The group operates a defined contribution pension scheme for employees. Theassets of the scheme are held separately from those of the group. The pensioncosts charged against profits are the contributions payable to the scheme inrespect of the accounting period. Taxation Current tax is the tax currently payable based on taxable profit for the year. Deferred income taxes are calculated using the liability method on temporarydifferences. Deferred tax is generally provided on the difference between thecarrying amounts of assets and liabilities and their tax bases. Tax lossesavailable to be carried forward as well as other income tax credits to the groupare assessed for recognition as deferred tax assets. Deferred tax liabilities are provided in full, with no discounting. Deferred taxassets are recognised to the extent that it is probable that the underlyingdeductible temporary differences will be able to be offset against futuretaxable income. Current and deferred tax assets and liabilities are calculatedat tax rates that are expected to apply to their respective period ofrealisation, provided they are enacted or substantively enacted at the balancesheet date. Changes in deferred tax assets or liabilities are recognised as a component oftax expense in the income statement, except where they relate to items that arecharged or credited directly to equity in which case the related deferred tax isalso charged or credited directly to equity. Foreign currencies Monetary assets and liabilities in foreign currencies are translated intosterling at the rates of exchange ruling at the balance sheet date. Transactionsin foreign currencies are translated into sterling at the rate of exchangeruling at the date of the transaction. Exchange differences are taken intoaccount in arriving at the operating result. Financial assets Financial assets are divided into the following categories: loans andreceivables; financial assets at fair value through profit or loss;available-for-sale financial assets; and held-to-maturity investments. Financialassets are assigned to the different categories by management on initialrecognition, depending on the purpose for which they were acquired. Thedesignation of financial assets is re-evaluated at every reporting date at whicha choice of classification or accounting treatment is available. All financial assets are recognised when the group becomes a party to thecontractual provisions of the instrument. Financial assets other than thosecategorised as at fair value through profit or loss are recognised at fair valueplus transaction costs. Financial assets categorised as at fair value throughprofit or loss are recognised initially at fair value with transaction costsexpensed through the income statement. The Group currently has the following financial assets: - Loans and receivables Trade receivables are categorised as loans and receivables. Trade receivablesare non-derivative financial assets with fixed or determinable payments that arenot quoted in an active market. Trade receivables are measured subsequent toinitial recognition at amortised cost using the effective interest method, lessprovision for impairment. Any change in their value through impairment orreversal of impairment is recognised in the income statement. Provision against trade receivables is made when there is objective evidencethat the group will not be able to collect all amounts due to it in accordancewith the original terms of those receivables. The amount of the write-down isdetermined as the difference between the asset's carrying amount and the presentvalue of estimated future cash flows. - Available for sale financial assets Available-for-sale financial assets include non-derivative financial assets thatare either designated as such or do not qualify for inclusion in any of theother categories of financial assets. All financial assets within this categoryare measured subsequently at fair value, with changes in value recognised inequity, through the statement of changes in equity. Gains and losses arisingfrom investments classified as available-for-sale are recognised in the incomestatement when they are sold or when the investment is impaired. In the case of impairment of available-for-sale assets, any loss previouslyrecognised in equity is transferred to the income statement. Impairment lossesrecognised in the income statement on equity instruments are not reversedthrough the income statement. Impairment losses recognised previously on debtsecurities are reversed through the income statement when the increase can berelated objectively to an event occurring after the impairment loss wasrecognised in the income statement. An assessment for impairment is undertaken at least at each balance sheet date. A financial asset is derecognised only where the contractual rights to the cashflows from the asset expire or the financial asset is transferred and thattransfer qualifies for derecognition. A financial asset is transferred if thecontractual rights to receive the cash flows of the asset have been transferredor the group retains the contractual rights to receive the cash flows of theasset but assumes a contractual obligation to pay the cash flows to one or morerecipients. A financial asset that is transferred qualifies for derecognition ifthe group transfers substantially all the risks and rewards of ownership of theasset, or if the group neither retains nor transfers substantially all the risksand rewards if ownership but does transfer control of that asset. Financial liabilities Financial liabilities are obligations to pay cash or other financial assets andare recognised when the group becomes a party to the contractual provisions ofthe instrument. There are no financial liabilities categorised as at fair valuethrough profit and loss. All other financial liabilities are recorded initiallyat fair value, net of direct issue costs. A financial liability is derecognised only when the obligation is extinguished,that is, when the obligation is discharged or cancelled or expires. Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits, togetherwith other short-term, highly liquid investments that are readily convertibleinto known amounts of cash and which are subject to an insignificant risk ofchanges in value. Equity settled share based payments All share-based payment arrangements granted after 7 November 2002 that had notvested prior to 1 January 2006 are recognised in the financial statements. All goods and services received in exchange for the grant of any share-basedpayment are measured at their fair values. Where employees are rewarded usingshare-based payments, the fair values of employee services are determinedindirectly by reference to the fair value of the instrument granted to theemployee. This fair value is appraised at the grant date and excludes the impactof market vesting conditions. The fair value is charged to the profit and lossaccount between the date of issue and the date the share options vest with acorresponding credit taken to shareholders' funds. Warrants granted to employees which relate to salary sacrifice arrangements areattributed a fair value by reference to the services provided. This fair valueis charged to the profit and loss account when the service is provided with acorresponding credit taken to shareholders' funds. Equity Equity comprises the following: •"Share capital" represents the nominal value of equity shares •"Share premium" represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue •"Other reserve" is a reserve established following the adoption of merger accounting as described in the business combinations completed prior to date of transition to IFRS' policy above. 3 Segment analysis The Group operates three main business segments, supply of degradable products,supply of non-degradable products and development of waste to energy systems. Business segments Degradable Non-degradable Waste to energy Group6 months to 30 June 2007 £'000 £'000 £'000 £'000 Revenue 1,260 440 - 1,700Apportioned costs 2,000 660 100 2,760 --------------- --------- -------- -------- --------Result for the periodbefore tax (740) (220) (100) (1,060) Taxation - - - - --------------- --------- -------- -------- --------Loss for the period (740) (220) (100) (1,060)--------------- --------- -------- -------- -------- Business segments Degradable Non-degradable Waste to energy Group6 months to 30 June 2006 £'000 £'000 £'000 £'000 Revenue 1,161 1,186 - 2,347Apportioned costs 1,432 1,783 - 3,215 --------------- --------- -------- -------- --------Result for the periodbefore tax (271) (597) - (868) Taxation - - - - --------------- --------- -------- -------- --------Loss for the period (271) (597) - (868)--------------- --------- -------- -------- -------- Business segments Degradable Non-degradable Waste to energy Group12 months to 31 December £'000 £'000 £'000 £'0002006 Revenue 2,237 1,963 - 4,200Apportioned costs 3,628 2,952 6,580 --------------- --------- -------- -------- --------Result for the periodbefore tax (1,391) (989) - (2,380) Taxation 37 - - 37 --------------- --------- -------- -------- --------Loss for the period (1,354) (989) - (2,343)--------------- --------- -------- -------- -------- 4 Shares issued On 27 February 2007 the Group placed 10,085,000 ordinary 1p shares at 10p pershare and 3,800,000 ordinary 1p shares at 3p per share. On 9 May 2007 320,000ordinary 1p shares were issued at 6.25p per share in respect to part conversionof a convertible loan. This increased Symphony's ordinary shares issued andfully paid at the end of the period under review by 14,205,000. Shares issuedfor the period under review may be summarised as follows: Shares issued and fully paid 6 months to 6 months to Year to 30 June 2007 30 June 2006 31 December 2006 - beginning of period 69,679,547 63,379,547 63,379,547 - issued during the period 14,205,000 - 6,300,000 ----------------- --------- --------- ---------Total equity shares issuedand fully paid at end ofperiod 83,884,547 63,379,547 69,679,547----------------- --------- --------- --------- The shares issued yielded £1,122,500 in cash and reduced the capital element ofthe convertible loan by £20,000. In total equity was increased by £1,142,500.The weighted average share price at the dates of exercise was: 27 February 2007 8.00p 9 May 2007 6.25p 5 Earnings per share and dividends Subsequent to the shares issued, the weighted average number of outstandingshares used for basic and diluted earnings per share have been adjusted asfollows: At 31 December Adjustments At 30 2006 June 2007 Basic and diluted 69,679,547 9,527,597 79,207,144Total operations - loss beforetaxation £1,060,000Basic and diluted loss per share 1.33 pence No dividends were paid for the year ended 31 December 2006. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Symphony Env.