TIDMBIOM
RNS Number : 9938I
Biome Technologies PLC
27 March 2018
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 ("MAR")
27 March 2018
Biome Technologies plc
("Biome", "the Company" or "the Group")
Preliminary Results
Biome Technologies plc announces its Preliminary Results for the
year ended 31 December 2017.
Highlights
-- Substantial increase of 36% in Group revenues in 2017 to GBP6.2m (2016: GBP4.6m)
-- Growth in both Bioplastics and RF Technologies divisions
-- Group EBITDA profit of GBP0.1m (2016: EBITDA loss of GBP0.2m on a like-for-like basis)
-- Gross margins robust at 50% (2016: 51%)
-- Cash generation takes Group cash position at 31 December 2017
to GBP2.3m (31 December 2016: GBP1.5m)
Paul Mines, Chief Executive Officer said:
"The Group has made substantial progress throughout the year
across both divisions which resulted in an EBITDA profit for the
Group. Strong demand across the RF division's existing product
range and the change of public perception on plastic waste provide
a supportive environment. As a result, the Board is confident in
the Group's outlook for 2018."
For further information please contact:
Biome Technologies plc
Paul Mines, Chief Executive
Officer
Declan Brown, Group
Finance Director
www.biometechnologiesplc.com Tel: +44 (0) 2380 867
100
Allenby Capital
David Hart/Alex Brearley
(Nominated Adviser)
Chris Crawford/Kelly
Gardiner (Broker)
www.allenbycapital.com Tel: +44 (0) 20 3328
5656
Chairman's Statement
Biome's turnover increased 36% in 2017 and an EBITDA positive
result was achieved; a significant step for the Group. The
performance in the enclosed statutory results stems from the
pursuit of the Group's clear commercial strategy over the last four
years. We believe that Biome is now in transformation from a
loss-making company with an interesting technology portfolio to a
company with a stable financial outlook and strong growth
potential.
As we progress through the first quarter of 2018, I write
against a very encouraging background for both of the Group's
divisions. For the Bioplastics division, it is the increasing focus
on plastic waste both in public opinion and amongst policy-makers.
The need for alternatives is now clearly understood, providing
encouragement for the future growth of bioplastic products. For the
radio frequency (RF) division, it is the growing demand principally
related to the roll-out of infrastructure investment in 5G
telecommunications in Asia.
With both divisions experiencing strong interest from existing
and prospective customers, sales opportunities are increasing and
we are using our experience to widen and deepen the range of
products that will help deliver our objectives. As a consequence,
we have decided to increase our people investment in both divisions
to ensure we can meet these demands.
Results
Group revenues were GBP6.2m (2016: GBP4.6m), reflecting material
increases in revenues in both the Biome Bioplastics and Stanelco RF
Technologies divisions. Gross margins at Group level were
maintained at 50% (2016: 51%) ensuring that the Group recorded an
EBITDA profit of GBP0.1m (2016: EBITDA loss of GBP0.2m, excluding
the one-off settlement agreement income). The operating loss was
reduced to GBP0.4m (2016: loss of GBP0.6m). The loss after taxation
was GBP0.2m (2016: loss of GBP0.5m). The loss per share in 2017 was
10 pence (2016: loss per share of 21 pence).
Biome Bioplastics' revenues increased to GBP2.3m (2016: GBP1.6m)
as a result of increased demand for the commercialised products
from the US single-serve coffee market, as well as the increase in
sales from the division's biodegradable non-woven filter for coffee
pods, which were launched in the second half of 2016. The division
recorded a slight EBITDA loss for the year of GBP0.1m (2016: EBITDA
profit of GBP0.1m) due to costs incurred in customer support for
their switch over to the biodegradable non-woven mesh. The
resultant operating loss was GBP0.4m (2016: loss of GBP0.5m).
Within the Stanelco RF Technologies division, revenues increased
to GBP4.0m (2016: GBP3.0m) as the division benefitted from the
upturn in the fibre optic market. This increase in turnover
resulted in a sharp increase in the EBITDA profit for the year to
GBP1.4m (2016: GBP0.8m). Operating profits also increased to
GBP1.3m (2016: GBP0.7m).
The Group continued to manage its cash position carefully,
taking cash balances at 31 December 2017 to GBP2.3m (31 December
2016: GBP1.5m). This positive movement included the receipt of the
one-off settlement agreement recorded in 2016 of GBP0.45m. The cash
generated by operations, excluding the GBP0.45m settlement
agreement mentioned above, was GBP0.2m (2016: cash generation
GBP0.3m), which included a decrease of GBP0.2m in working capital,
mainly the result of deposits on equipment orders in the RF
division due for delivery in 2018. Capitalised investment in
product development was GBP0.1m (2016: GBP0.5m).
Strategy
The Group's strategy has been, and remains, to build a leading
position in its chosen markets based on proprietary IP-protected
technology. It has chosen to do this by developing products in
application areas where value-added pricing can be justified and
that are not reliant on government legislation. These products are
driven by customer requirements and are compatible with existing
manufacturing processes. They are market rather than
technology-led.
The 2013 Annual Report, highlighted the three high-level Key
Performance Indicators (KPIs) that the Board adopted for the
business trajectory through to the end of 2017. A review of the
three performance indicators is shown below:
-- Vigorous growth of revenues of over 40% per annum in a number
of the Group's specialised applications that are founded on our
proprietary technology platforms;
In 2012, the Group sold its 50% share of Biotec and began a
strong emphasis on its proprietary technology within the
Bioplastics division. In 2013 no sales were generated from this KPI
but in 2017 we had achieved sales of GBP0.4m. Since 2013 the Group
has achieved cumulative annual revenue growth at 33%
-- A highly differentiated product pipeline that will diversify
our commercially-viable product ranges by 50% by 2017 and will fuel
our sustained revenue growth;
14% of 2017 revenue was generated from products introduced since
2013 and we have had greater success from sales of existing
products than originally envisaged.
-- Passing the "earnings positive" inflection point in quarterly trading during 2015.
This was achieved in 2015 and the Group recorded an EBITDA
profit (before share options charges) for 2017 as a whole.
We knew the targets we set in the above KPIs were challenging
but we felt that we had to let shareholders understand the scale of
our ambition for the Group. Given the progress the Company has made
over the last four years on the above KPIs, the Board has now
adopted the following three high level KPIs to continue this
ambitious momentum.
-- Compound revenue growth of 25% per annum across the Group and
40% compound revenue growth in the Bioplastics division.
-- Diversify the Group's turnover by product and market to
ensure that no one product or end customer contributes more than
15% of revenues by 2020.
-- Increase investment in the Group's next generation of
products by spending significantly more per annum on average than
the GBP0.3m per annum average spend over the previous strategic
objective cycle.
We believe the above new KPIs demonstrate our ambition to create
a strong, innovative and balanced business. As before, the Board
will measure the Group's performance against these new KPIs going
forward and report to shareholders annually on progress.
Biome Bioplastics
Bioplastics made a significant breakthrough in 2017 with the
adoption by one US customer of its revolutionary bio-degradable
mesh for coffee pods. That customer is in the process of converting
its mesh needs to Biome's product exclusively and the financial
impact of that will be felt in 2018. We are continuing with trials
to encourage other producers to adopt our technology. We continue
to develop innovations for the coffee-pod market, among others, and
are currently in advanced trials to supply an improved ring
product. If successful, this new product is expected to positively
impact our second-half performance in 2018.
Encouraged by broader customer interest since the third quarter
of 2017, the division is now undertaking a much wider range of
development projects than it has before, with a variety of
customers in different application sectors. These projects are
expected to have commercialisation timescales that span from 2019
to 2022. To support this increased activity there will be further
investment in resources, including the recruitment of scientific
staff.
The division's mid-term research activities continue to focus on
the development of a new range of performance polymers derived from
biomass. This work is based on the use of advanced industrial
biotechnology techniques and is supported by a number of government
grants. The challenge is to develop a new generation of bio-based
and biodegradable plastic materials made through the use of
synthetic biology, that are able to compete on cost and
functionality with traditional petrochemicals. The technical
feasibility of a number of these potential products has now been
ascertained and work is now focused on the viability of production
and commercial scale-up, potentially with partners.
Stanelco RF Technology
The RF division had an outstanding year in 2017. Furnace demand
in Asia increased and the division sold very well into that
opportunity. Based on current orders, this strong market is
expected to continue into 2019.
During 2016, we reported on the division being awarded a
contract to develop a new pipe-welding system. The initial
development phase was completed in 2017 with the customer now
commissioning the next phase to provide pre-production units during
2018. If this next phase is successful, it may lead to substantial
production orders.
Additionally, the RF division has begun to sell products that
complement its expertise outside the furnace market and early
indications are positive that that strategy will be successful.
Plans to further increase the product range to other radio
frequency applications are well underway and 2018 is seeing the
launch of several new induction heating products coupled with
increased commercial activity in this area.
With an encouraging order book for 2018, the division is
recruiting additional technical and commercial staff to support
these activities.
Outlook
Both of our divisions have entered 2018 strongly. Given its
current order book, the RF division should continue its growth
trajectory from 2017. The Bioplastics division is addressing more
development opportunities than ever before. Towards the end of
2018, some of these opportunities should add to Bioplastics'
existing pipeline of sales.
To make the most of the improving business environment for our
two divisions, investment in people and facilities is key to
continued progress. With an improving financial profile we
currently expect to increase costs by virtue of this investment by
approximately GBP0.3m in 2018 and GBP0.4m on an annualised full
year basis. The full impact of this investment cost will not be
apparent until the 2019 financial year.
As a result of the above the Board is confident of maintaining
positive progress in the short and medium term for
shareholders.
John Standen
Chairman
Strategic Report
2017 delivered a step change in the performance of the Group
with an EBITDA profit, excluding share option charges, of GBP0.1m
(2016: EBITDA loss of GBP0.2m on a like-for-like basis, excluding
the settlement income).
In Biome Bioplastics, there was higher demand for the
commercialised products for the US single-serve coffee market as
well as the division benefitting from the first full year of sales
of the biodegradable non-woven mesh. As a result, turnover for the
year increased 44% over the prior year.
Stanelco RF Technologies continued its good upward revenue
trajectory following a successful 2016. Revenues in the year were
supported by very strong demand in the optic furnace market and
efforts continue to be made to open up new markets whilst
maintaining the level of service to this key market.
The divisional sections below outline the strategies that will
be adopted for 2018 and 2019 to meet the Group's objectives.
Biome Bioplastics Division
Revenues in the Bioplastics division increased to GBP2.3m (2016:
GBP1.6m). This increase in revenues reduced the division's
operating loss to GBP0.4m (2016: GBP0.5m).
Markets
Recent publicity, predominantly in the UK, has started shifting
the public opinion away from the use of single use plastics that
cannot be recycled. There remains a debate over the strategic
direction of recycling versus biodegradability, but a sustained
shift in public perception should help increase demand for the
Company's products over the coming years.
The production costs of functional bioplastics are at a
substantial premium to materials that are of petro-chemical origin.
This differential is a result of scale, functionality and input
costs and will not be resolved in the short term. Adoption of
today's bioplastics is therefore reliant on either legislative
drivers or a willingness from the consumer end-user to pay a
premium for either functional or "green" attributes.
Areas of the market that are best suited to accommodate this
price differential are: (i) those with a high technical performance
requirement; (ii) those where the biomaterial costs are a small
fraction of the end product price; or (iii) those where there is
strong consumer interest in the end-of-life performance of the
material.
It is in these three areas that Biome Bioplastics has continued
to focus its research and development activities and has developed
a number of technically leading products to match customer
requirements. These products are at various stages of the
commercial lifecycle. The Group uses the following categories to
define the stages of its product lifecycle:
-- Research phase - technology and product development occurring
within Biome's own laboratories or at external support
facilities
-- Development phase - the product is being developed and tested
with small scale supplies to customers for end use testing
-- Initial Manufacturing phase - the product is signed off by
the customer as suitable for its requirements but is now undergoing
significant long-term testing to ensure the end product can be run
in commercial quantities across the supply chain
-- Commercial phase - the product has been through the above two
phases with the customer and is now achieving regular and
significant sales with the end product being purchased and used by
the final consumer
Technical Development
Biome Bioplastic's development work remains focussed on
innovative developments where there is a customer pull for the
product and a willingness to pay a premium for the green
attributes. During 2017, the development team continued to focus on
supporting trials with existing and new customers to achieve
innovative ways to expand the product streams sustainably.
The division's significant focus throughout the year was the
completion of its range of products for the US single-serve coffee
pod market. These products include materials for the outer
packaging and lid, the ring of the pod, and mesh for the filter.
Using all of these materials creates a fully compostable coffee
pod. The outer packaging and lidding material have been in
commercial production for over two years and 2017 was the first
full year of sales of the division's innovative non-woven mesh with
these sales of this product building over the course of the year.
The material for the ring remains in the development phase.
The main focus of the business in 2017 was to assist new
customers for the non-woven biodegradable mesh to enable their
production lines to switch from existing PET-based products to our
biodegradable offering. In addition, further work has been
undertaken to develop the ring which is now in the latter stages of
the development phase. Commercialisation of the ring is anticipated
during 2018 and this product will complete our biodegradable
single-serve US coffee pod offering.
As reported previously, Biome has been working on medium-term
research into the transformation of lignocellulose (often
agricultural waste) into low cost bioplastics using microbial and
enzymatic routes. If successful, it is anticipated that this work
will result in bioplastics at a cost comparable to current
petro-based plastics which should transform the demand for
bioplastics. This development work is supported by a number of
research grants. The Company's specific targets are novel
polyesters that are both bio-based and biodegradable. These new
materials are showing interesting properties in lab-based testing
and the focus in 2018 will switch to limited scale-up activities to
allow broader testing. Various patent applications have been made
to support the materials and technology under development.
Stanelco RF Technologies Division
Stanelco RF Technologies is a specialist engineering business
focused on the design and manufacture of electrical/electronic
systems based on advanced radio frequency technology.
The division's core offering is the supply of fibre optic
furnaces, although the business continues in its strategic aims of
diversifying its product streams into other areas utilising radio
frequency technology. Total revenues in 2017 of GBP4.0m were
substantially higher than the prior year (2016: GBP3.0m). This
increase in revenues is attributable to very strong demand in the
fibre optic furnace market. Operating profit for the period
increased to GBP1.3m (2016: GBP0.7m).
The business currently focuses on four key revenue streams:
Optical Fibre Furnace Systems
Stanelco RF Technologies is a world leader in the design and
manufacture of induction furnace systems used in the manufacture
and processing of quartz glass "preforms" to produce optical fibre.
Each system is bespoke to a customers' exact requirements. The
global demand for optical fibre has increased in 2017 with
customers making capital investments as part of the roll out of
infrastructure investment in telecommunications, including "5G", in
Asia.
Plastic Welding Equipment
These units are used in a multitude of end-user applications
including the nuclear, medical and industrial sectors. The
equipment is provided in either hand-held, mobile or fully
automated static solutions, dependent on customers' requirements.
In addition, the division is the UK sales and service agent for
Forsstrom High Frequency AB, which extends Stanelco's product
offering into larger plastic welding equipment.
Induction Heating Equipment
In 2017, work in this area centred on the completion of the
contract to develop a new pipe welding system. This work was
successfully completed with Biome being commissioned for the next
phase of this project.
The division increased its sales effort in the Induction Heating
market in 2016. The benefits of this work are now being seen with
further enquiries and orders being received in this sector.
Service and Spares
The business continues to support its large installed equipment
base through the provision of maintenance support, system upgrades
and specialist spares across the globe.
Principal risks and uncertainties
The business is subject to a number of risks. The Directors have
set out below the principal risks facing the business. The
Directors continually review the risks identified below and, where
possible, processes are in place to monitor and mitigate such
factors.
Political, economic and regulatory environment
The Group is subject to political, economic and regulatory
factors in the various countries in which it operates. There may be
a change in government regulation or policies which materially
and/or adversely affect the Group's ability to successfully
implement its strategy. The Directors aim to focus their product
range on areas where demand is not reliant on government
regulation.
The Group exports the majority of its products and therefore
fluctuations in exchange rates may affect product demand in
different regions and may adversely affect the profitability of
products provided by the Group in foreign markets where payment is
made for the Group's products in local currency.
The Directors are informed regularly of the potential impact of
exchange rate movements on the business and act to mitigate any
adverse movements wherever possible. In order to mitigate any
adverse exchange rate movements, the Group looks to match the
currency of its input costs with those of the contractual selling
price.
The Group's products and manufacturing processes utilise a
number of raw materials and other commodities. The markets for
these materials and commodities may be subject to high price
volatility and the Group may be constrained if there is limited
supply.
The Group continually seeks to reduce its dependence on a small
number of raw materials. It seeks to negotiate best possible prices
and actively pursues new sources of raw material.
Some of the Group's products are employed in the food and
pharmaceutical industries, both of which are highly regulated.
There is a risk that the Group may lose contracts or be subject to
fines or penalties for any non-compliance with the relevant
industry regulations. The Group ensures its staff are well versed
in the regulatory environment of its end-use industries and
regularly reviews its product portfolio to ensure compliance with
relevant regulations.
Intellectual property
Although the Group attempts to protect its intellectual
property, there is a risk that patents will not be issued with
respect to applications now pending. Furthermore, there is a risk
that patents granted or licensed to Group companies may not be
sufficiently broad in their scope to provide protection against
other third party technologies. The Group takes professional advice
from experienced patent attorneys and works hard to win patents
applied for and to ensure that the scope is sufficiently broad.
Other companies are actively engaged in the development of
bioplastics. There is a risk that these companies may have applied
for (or been granted) patents which impinge on the areas of
activity of the Group. This could prevent the Group from carrying
out certain activities or, if the Group manufactures products which
breach (or may appear to breach) the patents there is a risk that
the Group could become involved in litigation which could be costly
and protracted and ultimately be liable for damages if the breach
is proven.
The Group keeps up-to-date with its competitors' product
developments and patent portfolios and aims to ensure that no
infringements occur. Professional advice is sought from experienced
patent attorneys if there are any concerns.
Competition
There is a risk that competitors may be able to develop products
and services that are more attractive to customers than the Group's
products and services.
The Group aims to be ahead of the competition through working
closely with customers to produce products that meet their exact
requirements.
Commercialisation of new products
There is a risk that the Group will not be successful in the
commercialisation of its products from early-stage research and
development to full-scale commercial sales. The Group develops a
number of products and some may not prove to be successful.
Specifically the risks associated with the product life cycle are
as follows:
-- Development phase - the development of the products may prove
not to be technically feasible or do not exactly match the
perceived customer need
-- Manufacturing phase - whilst the product matches the customer
needs it may not be able to be produced at the required commercial
speeds and/or at the required efficiency and quality
-- Commercialisation phase - the product may be superseded
either through price or a competitor product being more
advanced
The Directors ensure that regular reviews of product development
are undertaken so that unsuccessful developments can be terminated
early in their life cycle. If a project is deemed not to be
commercial or the economic benefits not probable then the
capitalised costs are written off.
Customers
The Group's ability to generate revenues for a number of its
products is reliant on a small number of customers. If one of these
customers was to significantly reduce its orders, this could have a
significant impact on the Group's results.
The Group works closely with its customers to ensure that its
products evolve to their requirements. In addition, the Group is
constantly adding to its customer base and, as its revenues grow,
seeks to become less dependent on any single customer.
Financial risks
The Group uses various financial instruments including cash,
lease finance, equity and other items such as trade receivables and
trade payables that arise directly from its operations. The
existence of these instruments exposes the Group to a number of
financial risks, the main ones being exchange rate risk, liquidity
risk, interest rate risk and credit risk. The Directors review and
agree policies for managing each of these risks and these are
summarised in Note 22 to the Group's full financial statements for
the year ended 31 December 2017.
Suppliers and Raw Materials
The Group is reliant on a few key suppliers to manufacture its
products. If one of these was to cease supplying the market it
could have a significant impact on the Group's ability to fulfil
its orders.
The Group is constantly adding to its supply base and testing
alternative sources of raw materials.
Financial review
The KPIs which the Board uses to assess the performance of the
Group are detailed in the Chairman's Statement. The Chairman's
statement forms part of the Strategic Report.
The summary results for the Group are shown below.
2017 2016 Growth
GBP'm GBP'm
LIKE-FOR-LIKE COMPARISONS
Revenues
Biome Bioplastics 2.3 1.6 44%
RF Technologies 3.9 3.0 32%
Total revenues 6.2 4.6 36%
======== ========
EBITDA (pre share option
charges)
Biome Bioplastics (0.1) 0.1
RF Technologies 1.4 0.8
Central costs (1.2) (1.1)
Like for Like EBITDA 0.1 (0.2)
Other income - 0.4
Reported EBITDA 0.1 0.2 (50%)
======== ========
Loss from Operations
Biome Bioplastics (0.4) (0.1)
RF Technologies 1.3 0.7
Central Costs (1.3) (1.2)
-------- --------
Like for Like Operating
Loss (0.4) (0.6) 33%
Other income - 0.4
Intangible Impairment
Charge - (0.4)
-------- --------
(0.4) (0.6) 33%
======== ========
Non-current assets 1.0 1.3
Inventories 0.8 0.4
Trade and other receivables 1.3 1.3
Cash 2.3 1.5
Trade and other payables (2.1) (1.0)
Net assets 3.3 3.5
======== ========
Revenues
Group revenues increased in the year to GBP6.2m from GBP4.6m due
to significant increases in revenues in both divisions.
In Stanelco RF Technologies, revenues benefitted from a strong
fibre optic furnace market whilst Biome Bioplastics revenues were
positively impacted by increased demand for its commercialised
products and the effects of the first full year of sales from its
new biodegradable non-woven mesh product.
EBITDA
EBITDA for the year was a profit of GBP0.1m (2016: loss GBP0.2m
on a like-for-like basis excluding the settlement income). This
improvement in EBITDA is a direct result of the increased
performance of the Stanelco RF division. The contribution of Biome
Bioplastics decreased due predominantly to increased costs incurred
to support customers in the switch over of their production lines
to the Company's biodegradable non-woven mesh. In addition, a lower
level of development spend was capitalised in the year.
Operating profits/(losses)
The Group's loss from operations, on a like for like basis,
reduced to GBP0.4m compared to GBP0.6m in the prior year.
Administrative costs across the Group in 2017 were GBP3.5m
(2016: GBP3.4m). When the non-cash effects of depreciation,
amortisation and share option charges are removed, the cash
administrative expenses in 2017 increased to GBP3.0m compared to
prior year (2016: GBP2.5m). This increase in expenses is
attributable to increased staffing resources, as a result of the
increased activity and lower levels of technical costs being
capitalised as an intangible asset. These lower levels of
capitalised costs are due to the focus of the technical team in
supporting a customer in its initial switch over to our
biodegradable non-woven mesh rather than development of new
products which require the costs to be capitalised in the balance
sheet under IFRS.
Investment in product development was GBP0.4m in the year (2016:
GBP0.6m) of which GBP0.1m (2016: GBP0.5m) was capitalised in the
year. Tax R&D claims resulted in a cash tax credit received in
the year of GBP0.2m (2016: credit of GBP0.1m).
The Group's loss after tax for the year reduced to GBP0.2m
(2016: loss after tax of GBP0.5m), giving a loss per share of 10p
(2016: loss per share of 21p).
Balance sheet
The carrying value of intangible assets relate to capitalised
development costs predominantly within the Biome Bioplastics
division for the Group's own intellectual property and product
range going forward.
As at 31 December 2017, there was GBP0.9m of capitalised
development costs (2016: GBP1.2m) within the Group's balance sheet,
of which GBP0.7m relates to BiomeMesh. An assessment is made at
least annually which assumes future potential market take up of the
products and the margins achievable.
Cashflow
2017 2016
GBP'm GBP'm
Cashflow on a Like for Like
Basis
Like for like loss from operations (0.4) (0.6)
Adjustment for non-cash items 0.5 0.4
Movement in working capital 0.6 0.5
Cash generated by operations 0.7 0.3
Investment activities (0.1) (0.5)
R&D Tax credit 0.2 0.1
Net increase/(decrease) in
cash 0.8 (0.1)
Opening cash balance 1.5 1.6
Closing cash balance 2.3 1.5
The cash generated from operations, before working capital
movements, was GBP0.1m (2016: cash utilisation of GBP0.2m on a
like-for-like basis) reflecting the reduced loss from operations
during 2017 compared to the prior period. Working capital decreased
by a net GBP0.6m and is mainly the result of the receipt of the
GBP0.45m settlement income which was recorded in other income in
2016 with the cash received in early 2017. As a result, the cash
generated by operations during 2017 was GBP0.7m (2016:
GBP0.3m).
Investment in the year in capitalised product development was
GBP0.1m (2016: GBP0.5m). R&D tax credits received in the year
were GBP0.2m (2016: GBP0.1m).
The closing cash position was GBP2.3m (2016: GBP1.5m). As
mentioned above, the year end cash figure is positively impacted by
the receipt of GBP0.45m for the settlement agreement recorded in
2017 as well as the positive EBITDA performance of the Group.
Going concern
The Directors have reviewed forecasts and budgets for the 12
months from the date on which the accounts have been approved,
which have been drawn up with appropriate regard for the current
macroeconomic environment and the particular circumstances in which
the Group operates. These were prepared with reference to the
forward order book and repeat business within the RF Division, and
the anticipated increased volume from the new products, as they
move from the manufacturing phase into the commercial phase of the
product lifecycle, within the Bioplastics Division. Consequently,
at the time of approving the financial statements, the Directors
consider that the Company and the Group, in conjunction with its
existing cash balances, have sufficient resources to continue in
operational existence for the foreseeable future and, accordingly,
that it is appropriate to adopt the going concern basis in the
preparation of the financial statements.
By order of the Board.
Paul Mines
Chief Executive Officer
CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME
For the year ended 31 December
2017
2017 2016
Total Total
-------------------------------- ------- -------- --------
Note GBP'000 GBP'000
-------------------------------- ------- -------- --------
4a -
REVENUE 4b 6,233 4,587
Cost of sales (3,131) (2,246)
GROSS PROFIT 3,102 2,341
Other income 5 - 450
Administrative expenses (3,513) (3,374)
4a -
LOSS FROM OPERATIONS 4b, 6 (411) (583)
Investment revenue 1 5
Foreign exchange (loss)/gain (32) 2
LOSS BEFORE TAXATION (442) (576)
Taxation 7 210 77
LOSS AND TOTAL COMPREHENSIVE
INCOME FOR THE YEAR (232) (499)
======== ========
Basic and diluted loss per
share - pence (continuing
and discontinuing operations) 8 (10) (21)
======== ========
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
As at 31 December 2017
2017 2016
Note GBP'000 GBP'000
------------------------------- ----- -------- --------
NON-CURRENT ASSETS
Other intangible assets 9 915 1,164
Property, plant and equipment 10 122 164
-------- --------
1,037 1,328
-------- --------
CURRENT ASSETS
Inventories 11 797 381
Trade and other receivables 1,335 1,345
Cash and cash equivalents 2,293 1,535
-------- --------
4,425 3,261
-------- --------
TOTAL ASSETS 5,462 4,589
======== ========
CURRENT LIABILITIES
Trade and other payables 12 2,125 1,066
2,125 1,066
-------- --------
TOTAL LIABILITIES 2,125 1,066
======== ========
NET ASSETS 3,337 3,523
======== ========
EQUITY
Share capital 117 117
Share premium account 740 740
Capital redemption reserve 4 4
Share options reserve 219 454
Translation reserve (85) (85)
Retained profits/(losses) 2,342 2,293
EQUITY ATTRIBUTABLE TO
EQUITY HOLDERS OF THE PARENT
AND TOTAL EQUITY 3,337 3,523
======== ========
The financial statements were approved by the Board on 26 March
2018.
Signed on behalf of the Board of Directors
Paul R Mines (Chief Executive)
Declan L Brown (Group Finance Director)
26 March 2018
CONSOLIDATED STATEMENT
OF CHANGES IN
EQUITY
As at 31 December
2017
Attributable
to equity
Share Capital Share holders
Share premium Redemption options Translation Retained of the TOTAL
capital account Reserve reserve reserves earnings parent EQUITY
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at
1 January 2017 117 740 4 454 (85) 2,293 3,523 3,523
========= ========= ============ ========= ============ ========== ============= ========
Share options
charges in
year - - - 46 - - 46 46
Cancellation
of expired
share options - - - (281) - 281 - -
Transactions
with owners - - - (235) - 281 46 46
--------- --------- ------------ --------- ------------ ---------- ------------- --------
Loss for the
year - - - - - (232) (232) (232)
Total
comprehensive
income for
the year - - - - - (232) (232) (232)
--------- --------- ------------ --------- ------------ ---------- ------------- --------
Balance 31
December 2017 117 740 4 219 (85) 2,342 3,337 3,337
========= ========= ============ ========= ============ ========== ============= ========
Balance at
1 January 2016 117 740 4 542 (85) 2,597 3,915 3,915
==== ==== ====== ===== ====== ====== ======
Share options
charges in
year - - - 107 - - 107 107
Cancellation
of expired
share options - - - (195) - 195 - -
Transactions
with owners - - - (88) - 195 107 107
---- ---- ------ ----- ------ ------ ------
Loss for the
year - - - - - (499) (499) (499)
Total comprehensive
income for
the year - - - - - (499) (499) (499)
---- ---- ------ ----- ------ ------ ------
Balance 31
December 2016 117 740 4 454 (85) 2,293 3,523 3,523
==== ==== ====== ===== ====== ====== ======
CONSOLIDATED STATEMENT
OF CASH FLOWS
For the year ended 31 December
2017
2017 2016
GBP'000 GBP'000
------------------------------------ -------- --------
Loss from operations (411) (583)
Adjustment for:
Amortisation and impairment
of intangible assets 355 653
Depreciation of property,
plant and equipment 64 64
Share based payments 46 107
Foreign exchange (26) -
-------- --------
Cash generated before movement
in working capital 28 241
(Increase)/decrease in inventories (417) 664
Decrease/(increase) in receivables 5 (8)
Increase/(decrease) in payables 1,059 (561)
-------- --------
Cash utilised by operations 675 336
Corporation tax received 210 77
Interest paid - -
-------- --------
Net cash inflow from operating
activities 885 413
-------- --------
Cash flows from investing
activities
Interest received 1 5
Investment in intangible
assets (106) (452)
Purchase of property, plant
and equipment (22) (19)
-------- --------
Net cash used in investing
activities (127) (466)
-------- --------
Net increase/(decrease) in
cash and cash equivalents 758 (53)
Cash and cash equivalents
at beginning of year 1,535 1,588
Effect of foreign exchange
rate changes - -
-------- --------
Cash and cash equivalents
at end of year 2,293 1,535
======== ========
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2017
1. NON-STATUTORY FINANCIAL STATEMENTS
The financial information set out in this preliminary results
announcement does not constitute the Group's statutory financial
statements for the year ended 31 December 2017 or 2016 but is
derived from those financial statements. Statutory financial
statements for 2016 have been delivered to the Registrar of
Companies. Those for 2017 will be delivered following the Company's
Annual General Meeting, which will be convened on 24 April 2018.
The auditors have reported on those accounts: their reports on
those financial statements were unqualified and did not contain
statements under Section 498 of the Companies Act 2006.
The financial statements, and this preliminary statement, of the
Group for the year ended 31 December 2017 were authorised for issue
by the Board of Directors on 26 March 2018 and the balance sheet
was signed on behalf of the Board by Paul R Mines and Declan L
Brown.
2. BASIS OF PREPARATION
The Group's financial statements have been prepared in
accordance with International Financial Reporting Standards
("IFRS") as adopted by the EU.
3. BASIS OF CONSOLIDATION
The Group financial statements consolidate the results of the
Company and all of its subsidiary undertakings drawn up to 31
December 2017. Subsidiaries are entities over which the Group has
control. Control comprises an investor having power over the
investee and is exposed, or has rights, to variable returns from
its involvement with the investee and has the ability to affect
those returns through its power. At 31 December 2017 the subsidiary
undertakings were Biome Bioplastics Limited, Stanelco RF
Technologies Limited, Aquasol Limited, and InGel Technologies
Limited (dormant).
The assets and liabilities of the Biome Technologies plc
Employee Benefit Trust ("EBT") are included within the consolidated
statement of financial position on the basis that the Group has the
ability to exercise control over the EBT.
4a. SEGMENTAL INFORMATION FOR YEARED 31 DECEMBER 2017
Central
Bioplastics RF Technologies Costs Total
2017 2017 2017 2017
GBP'000 GBP'000 GBP'000 GBP'000
Revenue from
external customers 2,279 3,954 - 6,233
------------ ---------------- -------- --------
(LOSS)/PROFIT
FROM OPERATIONS (421) 1,338 (1,328) (411)
Investment revenue 1
Foreign exchange
loss (32)
LOSS BEFORE TAXATION (442)
========
TOTAL ASSETS 1,795 1,380 2,287 5,462
============ ================ ======== ========
4b. SEGMENTAL INFORMATION FOR YEARED 31 DECEMBER 2016
Central
Bioplastics RF Technologies Costs Total
2016 2016 2016 2016
GBP'000 GBP'000 GBP'000 GBP'000
Revenue from
external customers 1,585 3,002 - 4,587
------------ ---------------- -------- --------
(LOSS)/PROFIT
FROM OPERATIONS (60) 713 (1,236) (583)
Investment revenue 5
Foreign exchange
gain 2
LOSS BEFORE TAXATION (576)
========
TOTAL ASSETS 2,247 659 1,683 4,589
============ ================ ======== ========
The Bioplastics division comprises of Biome Bioplastics Limited
and Aquasol Limited.
5. OTHER INCOME
On 18 January 2017, the Group announced that it had entered into
a settlement agreement with third parties regarding legacy
technology licencing arrangements involving the use of Aquasol's
historic technology. As part of the settlement agreement, Aquasol
received GBP450,000 as part of a mutual release of obligations by
the parties. The income was recorded in the results for the year to
31 December 2016 whilst the cash was received at the beginning of
2017. The patents associated with this technology are no longer in
force.
6. EARNINGS BEFORE INTEREST, TAXATION, DEPRECIATION, AND
AMORTISATION
The Group, and divisions, define earnings before interest,
taxation, depreciation and amortisation ("EBITDA") as the operating
profit or loss adjusted for share option charges, executive
incentive scheme charges, depreciation and amortisation. The Group
EBITDA is reconciled as follows:
2017 2016
GBP'000 GBP'000
Operating loss (411) (583)
Amortisation 355 653
Depreciation 64 64
Share option scheme charges 46 107
Executive incentive scheme
charges 54 25
-------- --------
EBITDA 108 266
======== ========
7. TAXATION
The Group's policy is to recognise tax credits resulting from
tax R&D claims on a cash received basis. The claim in respect
of the year ended 31 December 2016 has now been settled. A tax
credit has, therefore, been recognised in the Group's financial
statements in respect of that claim.
8. EARNINGS PER SHARE
The calculation of earnings per share is based on the loss
attributable to the equity holders of the parent for the year of
GBP232,000 (2016: loss of GBP499,000) and a weighted average of
2,347,536 (2016: 2,347,536) ordinary shares in issue.
9. OTHER INTANGIBLE ASSETS
During the year there was a capitalisation of GBP106,000 of
product development costs (2016: GBP452,000). The amortisation
charge for the year was GBP355,000 (2016: GBP653,000, which
included a one-off impairment charge of GBP379,000).
10. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment of GBP22,000 were acquired in the
year (2016: GBP19,000). The depreciation charge for the year was
GBP64,000 (2016: GBP64,000).
11. TRADE AND OTHER RECEIVABLES
Trade and other receivables were at comparable levels year on
year with an increase in trade debtors, as a result of the timing
of shipments at the year end, being offset by the GBP450,000
receivable in the prior year balance sheet, see note 5.
12. TRADE AND OTHER PAYABLES
Trade and other payables increased in the year due mainly to
increase in deposits taken within the Stanelco RF division for
equipment orders which will be supplied in 2018.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR FMGZFNVDGRZM
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