TIDMBIOM

RNS Number : 4152T

Biome Technologies PLC

25 March 2021

The information contained within this announcement is deemed by the Company to constitute inside information for the purposes of Regulation 11 of the Market Abuse (Amendment) (EU Exit) Regulations 2019/310.

25 March 2021

Biome Technologies plc

("Biome", "the Company" or "the Group")

Final Results 2020

Biome Technologies plc announces its audited Final Results for the year ended 31 December 2020.

Highlights:

Final Results

-- Another strong year for the Bioplastics division with revenue growth of 65% building on the 81% revenue growth achieved in 2019. The division enters 2021 with a healthy pipeline of customer positions and prospects.

-- RF Technologies division revenues reduced to GBP0.8m due to the o ngoing over-capacity in the division's core fibre optics manufacturing market.

-- Reported Group loss before interest, interest, taxation and amortisation (LBITDA) of GBP0.9m (2019: LBITDA of GBP0.5m), in line with market expectations, with Group operating loss of GBP1.6m (2019: loss of GBP1.0m).

-- Group cash position as at 31 December 2020 was GBP1.7m (31 December 2019: GBP2.1m) with no debt.

Paul Mines, Chief Executive Officer said: "2020 saw further strong revenue growth from the Group's Bioplastics division reflecting the conversion of the pipeline of opportunities that it entered the year with. New opportunities from both existing and new customers continue to present themselves both for bioplastic packaging from the coffee sector and other segments of the food and beverage packaging market. We will continue to work our cash resources to maximise our ability to overcome the challenges posed by Covid-19 and deliver good medium-term growth for shareholders".

- Ends -

 
 
   For further information please contact: Biome 
   Technologies plc 
 
   Paul Mines, Chief Executive Officer 
 Rob Smith, Chief Financial Officer 
 www.biometechnologiesplc.com   Tel: +44 (0) 2380 867 
                                 100 
 
   Allenby Capital 
 David Hart/Alex Brearley (Nominated Adviser) 
  Kelly Gardiner (Sales and Corporate Broking) 
 www.allenbycapital.com         Tel: +44 (0) 20 3328 
                                 5656 
 
 
 

About Biome

Biome Technologies plc is an AIM listed, growth-orientated, commercially driven technology group. Our strategy is founded on building market-leading positions based on patented technology and serving international customers in valuable market sectors. We have chosen to do this by developing products in application areas where the value-added pricing can be justified and 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 Group comprises two divisions, Biome Bioplastics Limited ("Bioplastic") and Stanelco RF Technologies Limited ("RF Technologies").

Biome Bioplastics is a leading developer of highly-functional, bio-based and biodegradable plastics. The company's mission is to produce bioplastics that challenge the dominance of oil- based polymers.

Stanelco RF Technologies designs, builds and services advanced radio frequency (RF) systems. Dielectric and induction heating products are at the core of a product offering that ranges from portable sealing devices to large furnaces for the fibre optics markets.

www.biometechnologiesplc.com www.biomebioplastics.com and www.thinkbioplastic.com www.stanelcorftechnologies.com

Chairman's Statement

Business performance

2020 was a pivotal year for the Group with its Bioplastics division's sales growing to a record GBP4.9m (65% increase over 2019), as we continue to benefit from the momentum in supplying compostable bioplastics to growing market sectors. By contrast, our RF Technologies division was, as anticipated, adversely affected by overcapacity in the fibre optic cable manufacturing sector.

Both businesses operated against the ongoing backdrop of the Covid-19 pandemic and lockdowns, which, whilst hindering our efforts to diversify the RF Technologies division's customer base, demonstrated the resilience of the bioplastics market and the strength of Biome's offering and relevance to this rapidly expanding compostable materials market.

As a result of these trends, Bioplastics represented 86% of Group revenues in the year.

During the year we completed an equity placing and subscription that raised an additional GBP1.0m, net of costs, to strengthen our balance sheet to support the continued expectations of growth in Bioplastics.

Bioplastics division

In our placing circular to shareholders last year, we laid out four growth drivers which we believed would deliver significant value for shareholders and maintain our KPI target of 40% revenue growth in the Bioplastics division through 31 December 2023. I would like to mention these growth drivers again specifically and update you on progress in each of them:

1. Continued growth from existing customers with existing products, especially flexible film in both industrial and particularly home compostable formats, in the North American market.

Growth from our existing customers and products remains positive. We expect growth in flexible film in North America to be more pronounced in the medium term.

2. Filtration mesh: The Company envisages growth with a second end-customer with a material that has been proven with an existing customer over the last three years. Implementation of this project is underway.

This project is going well, and we confidently expect implementation to complete later this year. As recently announced, our second end-customer has placed orders for equipment that increases their capacity to utilise Biome's filtration mesh on a significant proportion of their installed capacity. Revenues will become significant and recurring from H2 2021 and for the whole of 2022, thus delivering a major part of our KPI target.

3. Coffee pod material: The Company launched a project for a heat stable material for coffee pods within the US at the end of 2019. Commercial sales of this product are gaining momentum.

In addition to continued demand from the lead customer (as previously announced) this material is now being trialled at several other end-user organisations. We expect significant commercial progress in this area in H2 this year and beyond.

4. Packaging film: The Company is working on seven new customer projects that focus on the conversion of flexible packaging to compostable formats. Six of these projects are for the North American Market.

Six of these original projects continue at pace with trials either taking place in Q1 or expected for Q2 2021. One project with an end-user in the USA has been suspended due to the pandemic. A further pipeline of new customer projects of scale has been added to this growth driver and trial orders have been placed by customers in Q1 this year. We expect two or three of these to become commercially meaningful and generate recurring revenue towards the end of this year.

Over the last seven years, Biome Bioplastics has coordinated significant research and development funding in conjunction with leading universities, in pursuit of bringing a new family of novel bio-based and biodegradable polyesters to market. Exciting new materials are now emerging, and we have recently announced our success in partnering with Innovate UK, the UK's innovation agency and a leading manufacturer to bring a biodegradable tree-guard to market. This project is still at a relatively early stage and it is therefore too early to predict the scale or timing of production orders. However, the Board is encouraged by the support and reception that this initiative has already gained.

We believe that the progress described above highlights the growing reputation of our Bioplastics business for innovative materials and how it is leading to market success and penetration, particularly in the USA.

RF Technologies division

The downturn in demand for capital goods in the fibre optic cable manufacturing sector that the division first saw in 2019 continued throughout 2020. The division's efforts to diversify its revenue stream were hampered by the ongoing Covid-19 pandemic, as it became difficult to engage with new customers and a number of potential opportunities were put on hold as our clients deferred capital expenditure. In the face of the ongoing difficulties in the fibre optic market and other sectors, it was necessary to implement a number of cost reduction measures. 2021 has started with some glimmers of recovery in the fibre optic sector and we have started receiving more enquiries both for new fibre optic furnaces as well as spares and service orders, although we do not expect to see a material pickup in the near future.

Covid-19

The Group continues to monitor the ongoing impact of the Covid-19 epidemic and places high importance on caring for its staff and customers. Adjustments made in 2020 to commercial and manufacturing activities remain in force and are continually reviewed to ensure they provide a safe operating environment.

With a year's experience of working with the varying restrictions in both in the UK and overseas, the Group has a better understanding of the commercial impact of the pandemic and has adapted accordingly to meet the opportunities and risks presented.

We have only experienced minor supply chain issues in the Bioplastics division but continue to be vigilant in case of any disruption. Business development has been successfully managed remotely with use of video conferencing to regularly interface with customers.

The RF Technologies division was more adversely impacted by Covid-19. The division's ongoing activity to widen the markets that it sells into has been frustrated by a slowdown in capital expenditure and restrictions placed on travelling to and meeting with potential customers.

A number of cost saving actions have been taken to reduce the RF Technologies division's overhead expenditure including a reduction in the number of staff and use of the Coronavirus Job Retention Scheme to maintain operational capabilities.

Whilst we expect to see a continuing impact from Covid-19, the business has adapted to the challenges that the pandemic has presented, and we look forward to a more normal environment in the future.

Results

The Group's results were in line with the market forecast for the year ended 31 December 2020.

Consolidated Group revenue for the year was GBP5.7m (2019: GBP7.0m) reflecting the increase in Bioplastics sales offset by the decline in those from the RF Technologies division. Group gross margins for the year were 29.4% (2019: 43.5%) reflecting the changing mix of sales towards volume Bioplastics.

The Group loss before interest, taxation, depreciation and amortisation (LBITDA) was in line with market expectations at GBP0.9m (2019: GBP0.5m LBITDA). A Group operating loss of GBP1.6m for the year was incurred (2019: GBP1.0m loss).

During 2020, the Board concluded that, to gain a more accurate representation of the costs and profits associated with the Bioplastics and RF Technologies divisions, certain costs previously accounted for as part of the Central Costs division would be allocated, to the operating divisions. These costs include insurance, accounting, administration, facilities, and executive management activities attributable to the operating divisions. A restatement of the segmental information for 2019 has been made to allow users of this information to compare it on a consistent basis.

The Bioplastics division achieved an increase in sales to GBP4.9m (2019: GBP3.0m) representing 65.4% growth as the division grew its sales with both new and existing customers and demand for compostable products strengthened. The division recorded a LBITDA of GBP0.1m which was an improvement over the prior year (2019: GBP0.8m LBITDA restated) as sales revenue increased. The resulting operating loss also narrowed to GBP0.5m (2019: GBP1.2m loss restated).

The RF Technologies division's revenues were GBP0.8m (2019: GBP4.0m) reflecting the hiatus in demand in the fibre optic market compounded by the effects of the Covid-19 pandemic. The division reported a LBITDA of GBP0.4m (2019: GBP0.8m EBITDA restated) and an operating loss of GBP0.5m (2019: GBP0.7m profit restated). These results reflect management actions to reduce costs where possible in the light of market conditions and benefiting from the UK Government's Coronavirus Job Retention scheme.

The Group's cash balances as at 31 December 2020 were GBP1.7m (31 December 2019: GBP2.1m) reflecting trading losses for the year offset by the net equity fund raise of GBP1.0m in the year. The Group had no debt as at 31 December 2020. Capitalised product investment in the Bioplastics division was GBP0.3m (2019: GBP0.3m).

Strategy

The Group continues to execute on its strategy to be a leading player in its chosen markets. In both markets addressed by the Group our products are developed to meet our customers' demanding requirements and incorporate a high level of technological knowhow that differentiates our offerings from the competition.

In the Chairman's statement, made as part of the interim results for 2020, we updated and restated our high level Key Performance Indicators (KPIs) to extend the period they cover to 31 December 2023 and to reflect the continued growth in the Bioplastics division as well as the market headwinds facing the RF Technologies division. The revised KPIs and the progress made as at 31 December 2020 is set out below: -

 
 --   40% annual revenue growth in the Bioplastics division. 
                 During the year ended 31 December 2020, the division exceeded 
                  this target with revenue growth of 65.4%. 
 --   Bioplastics division's profitable revenue growth to achieve 
       a 10%-12.5% EBITDA margin by the end of the KPI period. 
                 Good progress was made towards this KPI as the Bioplastics division's 
                  LBITDA narrowed to 2.4% for 2020 compared with 27.4% LBITDA 
                  in 2019 (calculated on a like-for-like basis). 
 --   Continued diversification of the Group's turnover by product 
       and market to ensure that no single product or end customer 
       contributes more than 15% of revenues by 2023. 
                 The Group had two customers (2019: two customers) who each accounted 
                  for more than 15% of Group revenues. In 2020, both of these 
                  customers were in the Bioplastics division as their use of Biome 
                  products continued to grow. The two customers referred to are 
                  converters of material for a further number of end customers. 
                  Good progress is being made to diversify the number of end customers 
                  and the variety of products being sold. 
 --   Continued 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. 
                 The Group met this target with GBP0.7m R&D investment in the 
                  year. 
 

Board and personnel changes

In October 2020, we were pleased to announce the appointment of Rob Smith as Chief Financial Officer. Rob is an experienced 'C-level' executive with many years' service with technology-based AIM listed SMEs both as CFO and CEO and having most recently been CEO at Filtronic plc.

Post year-end Michael Kayser confirmed his decision to retire from his role as non-executive director and chairman of both the Remuneration and Audit Committees. Michael has served Biome exceedingly well during a very exciting 10 years for the business.

We are pleased to welcome the appointment of Simon Herrick, as a non-executive director. He will be a member of the Nominations Committee and will chair both the Audit and Remuneration Committees. Simon qualified as a Chartered Accountant with Price Waterhouse and has held a number of executive director roles with listed companies including Northern Foods plc, Debenhams plc and Blancco Technology Group plc. Simon is currently NED and chair of Audit and Remuneration Committees at both Ramsdens Holdings PLC and FireAngel Safety Technology Group plc.

Race to Zero

As recently announced, Biome Technologies has signed up to the United Nations Race to Zero Climate Campaign and is committed to reducing its carbon emissions in line with publicly disclosed targets. We will commence reporting on our progress on this vital subject in our results for the year ending 31 December 2021.

Outlook

We believe that the growth phase that the Bioplastics division has entered represents a permanent move to more sustainable materials and confirmation that our strategy is working. We expect that the opportunities we have secured, and that are starting to turn into repeat business, are only the beginning of a market shift to more sustainable products. The RF Technologies division remains susceptible to market disruption caused by Covid-19 but we are encouraged by a slight improvement in its outlook; we will continue to closely monitor the ongoing progress of the division.

Trading in the first quarter of 2021 was in line with our expectations and the outlook for the year remains unchanged. We continue to manage our cash resources to ensure that we are able to achieve sustainability for the Group.

John Standen

Chairman

Strategic Report

Biome Technologies plc is a growth orientated, commercially driven technology group. Its strategy is founded on building market-leading positions based on patented technology and serving international customers in the bioplastics and radio frequency heating sectors. We have 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. The growing portfolio of products is driven by customer requirements and compatible with existing manufacturing processes. They are market rather than technology led.

The directors consider its shareholders, employees, customers and suppliers as its key stakeholders and the divisional analysis below outlines the strategies that have been adopted to promote the success of the Group and to meet its objectives.

Biome Bioplastics Division

The Bioplastics division achieved sales revenue of GBP4.9m (2019: GBP3.0m), an increase of 65.4%. This increase in reported revenues related to existing products as well as new product launches and reflects the continuing increased activity and enquiry levels that currently exist both in the Bioplastics division and also the wider market. Staffing and resourcing levels were adjusted accordingly to accommodate this increased activity, which is anticipated to maintain its upward trajectory over the coming years. The net effect of the increase in revenues was to decrease the division's operating loss to GBP0.5m (2019: GBP1.2m loss restated).

Markets

Plastics and their use or misuse by humanity remains a key environmental topic for both the UK and overseas markets. There is sustained pressure from consumers, media and governments to reduce the environmental impact of plastics. In recent years, the focus of this pressure has been on the "end-of-life" of such materials, how they are disposed of and the consequence of fugitive release to the environment. In addition, with rising concerns regarding climate change, there is greater interest in how such materials might also be manufactured with lower carbon footprints.

The compelling case for compostable (biodegradable) bioplastics lies in their ability to ensure that organic food waste reaches appropriate treatment (e.g. industrial scale anaerobic digestion and composting facilities) and that the resulting digestate and compost does not contain persistent plastic contamination when spread to soils. This is driving the growth of the compostable packaging market in sectors such as food waste bags, coffee pods, tea bags and other food contaminated packaging formats.

The growth of the compostable plastics market is facilitated when there is a clear route for food waste and food contaminated packaging to reach appropriate sorting and treatment facilities. This requires appropriate labelling, user education, collection, sorting and treatment capacity. The quality of such disposal supply chains varies considerably by geographic territory and often within countries although there is, in general, a move to improve and scale-up such activity.

Arguably, the consumer desire to change the plastic model is pulling through increased demand for compostable plastics at a rate that is faster than the disposal supply chains are able to adapt to. As a result, there is increased demand from the market for bioplastics that can be composted at home. Whilst it is a minority of the population that has the access and/or desire to treat organic waste and packaging at home, those that are are highly motivated to treat such waste appropriately. This is driving the compostable plastics market to producing and certifying products that are suitable for this end-of-life solution. Such products are required to compost at lower temperatures and in less well managed conditions than can be expected at industrial facilities.

The case for bio-based bioplastics is driven by the growing scientific evidence that the use of biogenic inputs reduces the carbon footprint of such materials and will in time lead to a more sustainable plastics industry. There are a limited number of territories that legislatively require bio-based inputs in some plastics, but it might be expected that this trend is likely to accelerate. There is some evidence that some consumers will choose bio-based materials when offered a choice, but this appears, at present, to sit behind the desire for compostable functionality.

The UK market has been somewhat slower to embrace compostable and bio-based materials than some other territories. Whilst there is considerable focus on plastic waste, there is still a continuing debate of how best to manage the problem. The local council control of the disposal supply chain and its wide variability is seen by some as part of the problem and a move in England towards universal food waste collection by 2023 presents an opportunity for compostable plastics. At present, the UK market remains a smaller part of the Bioplastics division's short-term focus with the more immediate sales opportunities and growth being in the US market.

Cost and functionality will remain key hurdles over the widespread adoption of bioplastics over petro-chemical plastics. Current adoption is therefore driven by consumer pull, and their willingness to pay a premium for biodegradability/compostability, or government legislation. To overcome these hurdles the Bioplastics division focuses on areas of the market where there is a high technical performance requirement, the cost of the biomaterial is a small fraction of the end product price, and where there is a consumer willingness to convert to a biodegradable material.

Research and development within the Bioplastics division is therefore focussed on these three areas and in particular targeted towards customer requirements for a biodegradable solution. The commercial lifecycle of our product developments can be categorised in the following stages of the 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 and 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 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 requirement for the product and a willingness to pay a premium for the environmental attributes. During 2020, the development team worked on a variety of technical challenges that included the development of home compostable materials, the improvement of oxygen and vapour barrier performance, the soil degradability of materials to be used in tree shelters and the improvement of temperature performance for a variety of end-uses.

The Bioplastics division also continued its work in medium term Industrial Biotechnology research into the transformation of lignocellulose (often sourced from agricultural waste) into low cost bioplastics using microbial and enzymatic routes. If successful, it is anticipated that this work will result in bioplastics with improved functionality at a cost comparable to current petro-based plastics. This development work continues to be supported by research grants and much of the work is undertaken in collaboration with leading UK universities.

Stanelco RF Technologies division

The RF Technologies division 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 is also exploring other markets where its expertise in induction heating can be utilised. Total revenues in 2020 were significantly reduced at GBP0.8m (2019: GBP4.0m). This reduction was caused by the combined effects of the continued low level of capital goods expenditure in the division's main telecoms fibre optic market due to the previously reported excess capacity for fibre optic industry and the Covid-19 pandemic that has caused delays in capital equipment purchases throughout the UK industrial sector. As a consequence of the reduced sales, the division incurred an operating loss for the period of GBP0.5m (2019: GBP0.7m profit restated).

The business currently focuses on four key revenue streams:

Optical Fibre Furnace Systems

The RF Technologies division is a world leader in the design and manufacture of induction furnace systems used in the manufacture and processing of silica glass "preforms" to produce optical fibre. Each system is bespoke to customers' exact requirements. There is currently a continuing imbalance in the global demand for optical fibre compared to the installed capacity base. This overcapacity affected demand for furnaces in 2020 with no orders being received during the year. It is expected that as demand for fibre optic cable grows, the imbalance in manufacturing capacity will reverse in the mid-term. The Group is receiving enquiries for specific types of furnaces and spares that suggests that capacity utilisation is increasing. Nonetheless, we do not expect to see a significant change in market dynamics during 2021.

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.

Induction Heating Equipment

The division sells bespoke induction heating equipment mainly into the UK industrial sector. Whilst this is a small part of the division's sales, it is a strategic aim to increase the equipment offering and expand sales of this type of equipment.

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

Biome 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 or mitigate all of these risks. Risks and uncertainties associated with the on-going Covid-19 pandemic are considered in a dedicated sub-section to the principal risks and uncertainties.

 
 Risk                 Nature                                                        Mitigation strategies 
 Political,           The Group is subject to                                       The Directors aim to focus 
  Economic             political, economic and                                       their product range on areas 
  and Regulatory       regulatory factors in                                         where demand is not reliant 
  Environment          the various countries                                         on government regulation. 
                       in which it operates.                                         The Group ensures its staff 
                       There may be a change                                         are well versed in the regulatory 
                       in government regulation                                      environment of its end-use 
                       or policies which materially                                  industries and regularly 
                       and/or adversely affect                                       reviews its product portfolio 
                       the Group's ability to                                        to ensure compliance with 
                       successfully implement                                        relevant regulations. 
                       its strategy. 
                       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. 
                     ============================================================  =================================== 
 Exchange             The Group exports the                                         The Directors are informed 
  Rate Fluctuations    majority of its products                                      regularly of the potential 
                       and therefore fluctuations                                    impact of exchange rate 
                       in exchange rates may                                         movements on the business 
                       affect product demand                                         and act to mitigate any 
                       in different regions and                                      adverse movements wherever 
                       may adversely affect the                                      possible. In order to mitigate 
                       profitability of products                                     the medium term impact of 
                       provided by the Group                                         any adverse exchange rate 
                       in foreign markets where                                      movements, the Group will 
                       payment is made for the                                       look to move production 
                       Group's products in local                                     and match the currency of 
                       currency.                                                     its input costs with those 
                                                                                     of the contractual selling 
                                                                                     price thereby reducing the 
                                                                                     currency movement risk to 
                                                                                     the gross margin of the 
                                                                                     product. 
                     ============================================================  =================================== 
 Suppliers            The Group's products and                                      To mitigate this risk, the 
  and Raw              manufacturing processes                                       division is seeking to validate 
  Materials            utilise a number of raw                                       new materials coming onto 
                       materials and other commodities.                              the market which may be 
                       In particular, the Bioplastics                                used in substitution. 
                       division requires a few, 
                       key raw materials to manufacture 
                       its biodegradable polymer 
                       resins. There are very 
                       few suppliers of these 
                       key raw materials and 
                       with the current increased 
                       demand for biodegradable 
                       products there is a risk 
                       that the division may 
                       not be able to purchase 
                       the required volumes of 
                       materials to meet customer 
                       demand or that prices 
                       may be increased at short 
                       notice. 
                     ============================================================  =================================== 
 Intellectual         Although the Group attempts                                   The Group takes professional 
  Property             to protect its intellectual                                   advice from experienced 
                       property, there is a risk                                     patent attorneys and works 
                       that patents will not                                         hard to win patents applied 
                       be issued with respect                                        for and to ensure that the 
                       to applications now pending.                                  scope is sufficiently broad. 
                       Furthermore, there is                                         The Group keeps up-to-date 
                       a risk that patents granted                                   with its competitors' product 
                       or licensed to Group companies                                developments and patent 
                       may not be sufficiently                                       portfolios and aims to ensure 
                       broad in their scope to                                       that no infringements occur. 
                       provide protection against                                    Professional advice is sought 
                       other third party technologies.                               from experienced patent 
                       Other companies are actively                                  attorneys if there are any 
                       engaged in the development                                    concerns. 
                       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) 
                       such 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. 
                     ============================================================  =================================== 
 Competition          There is a risk that competitors                              The Group aims to be ahead 
                       may be able to develop                                        of the competition through 
                       products and services                                         working closely with customers 
                       that are more attractive                                      to produce products that 
                       to customers, either through                                  meet their exact requirements 
                       price or technical performance,                               rather than offering "off 
                       than the Group's products                                     the shelf" solutions. 
                       and services. 
                     ============================================================  =================================== 
 Commercialisation    There is a risk that the                                      The Directors ensure that 
  of New Products     Group will not be successful                                   regular reviews of product 
                      in the commercialisation                                       development are undertaken 
                      of its products from early-stage                               so that unsuccessful developments 
                      research and development                                       can be terminated early 
                      to full-scale commercial                                       in their life cycle. Impairment 
                      sales. The Group develops                                      testing of the capitalised 
                      a number of products and                                       costs is performed twice 
                      some may not prove to                                          a year with any impaired 
                      be successful. Specifically,                                   capitalised costs written 
                      the risks associated with                                      off. 
                      the product life cycle 
                      are as follows: 
                       *    Research and Development phase - the development of 
                            the products may prove not to be technically feasible 
                            or do not exactly match the perceived customer need 
 
 
                       *    Initial 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 
                     ============================================================  =================================== 
 Customers            The Group's ability to                                        The Group works closely 
  and Customer         generate revenues for                                         with its customers with 
  Concentration        a number of its products                                      the aim of ensuring that 
                       is reliant on a small                                         its products evolve in line 
                       number of customers. If                                       with their requirements. 
                       one of these customers                                        In addition, the Group is 
                       was to significantly reduce                                   continually seeking to add 
                       its orders, then this                                         to its customer base and, 
                       could have a significant                                      as its revenues grow, seeks 
                       impact on the Group's                                         to become less dependent 
                       results.                                                      on any single customer. 
                     ============================================================  =================================== 
 Brexit               The UK left the European                                      The Group has worked closely 
                       Union during the year                                         with import and export agents 
                       under review and the transition                               as well as local advisers 
                       arrangements ended on                                         in Europe to ensure that 
                       31 December 2020. The                                         we are compliant with the 
                       new trade deal entered                                        various new regulations 
                       into between the UK and                                       now in force. 
                       the European Union was                                        The Group will continue 
                       in negotiation until the                                      to monitor local regulations 
                       end of the transition                                         as the new requirements 
                       period and therefore we                                       settle down and will introduce 
                       have had to implement                                         additional, proportionate 
                       new processes with little                                     mitigating policies as required. 
                       forward notice of the 
                       details of trading arrangements. 
                       This has caused some minor 
                       short-term disruption 
                       of both exports to and 
                       imports from countries 
                       in the European Union. 
                       The majority of the Bioplastics 
                       products that are produced 
                       in the European Union 
                       are sold either locally 
                       into the continental European 
                       market or exported directly 
                       to the US market. Whilst 
                       deliveries of these goods 
                       are not therefore transported 
                       through the UK new local 
                       documentation and compliance 
                       procedures have been required 
                       for us to export from 
                       the EU. 
                     ============================================================  =================================== 
 

Covid-19

The Covid-19 pandemic continues to significantly impact individuals, businesses, markets and economies, but despite this there has been minimal direct impact on the Group's operations. The Group has continued its manufacturing and development operations in accordance with Government advice.

New orders for products supplied by the RF Technologies division have reduced as our customers have reduced their investment activities. However, this must also be seen in the light of an overall excess in capacity in our main fibre optic market that had already seen suppressed sales in 2019.

The Biome Bioplastics division had to conduct some trials virtually, where physical attendance was not possible or permitted and it utilised the skills and expertise of a consultant in the US to assist with some of these trials.

The table below details some of the key risks and the strategies that we have introduced to mitigate the risks:

 
 Risk             Nature                             Mitigation strategies 
 Financial        Increased market risk and          The Group is tightly controlling 
                   reduced revenues heighten          overhead spend and actively 
                   the liquidity risk whilst          reducing spend where possible 
                   deterioration of the economic      and has used the UK Government's 
                   market heightens credit            Coronavirus Job Retention 
                   risk.                              Scheme (Furlough) to offset 
                   Economic disruption may            employment costs where staff 
                   also impact financial markets      have not been able to work 
                   including currencies, interest     due to "lockdown" restrictions 
                   rates, borrowing costs             and disruptions to order 
                   and the availability of            flows from customers. 
                   debt and equity finance.           It was necessary to make 
                   The impact of Covid-19             a number of staff redundant 
                   on our customers and their         in the RF division. 
                   ability to continue to             Some of the Group's customers 
                   trade and pay invoices             have experienced liquidity 
                   on time and the consequential      issues during the period 
                   impact on the Group's cashflow.    and this has meant that 
                   Impact of going concern            we have had to increase 
                   assessment.                        our provision for slow moving 
                                                      debts. As a result, the 
                                                      Group has focussed its activities 
                                                      on supplying customers with 
                                                      stronger financial positions. 
                                                      A thorough going concern 
                                                      assessment was conducted 
                                                      that considered a number 
                                                      of scenarios and included 
                                                      a reverse stress test. The 
                                                      directors concluded that 
                                                      there is sufficient working 
                                                      capital for the Group to 
                                                      meet present and future 
                                                      obligations over the next 
                                                      12 months. 
                 =================================  ==================================== 
 Health and       The health and safety of           The Group was quick to set 
  safety           our employees is of paramount      up a Covid-19 response team 
                   importance. There is a             and implement a range of 
                   risk that our colleagues           measures to combat the risks 
                   may come into contact with         of Covid-19. This included 
                   carriers of Covid-19 and           asking all employees to 
                   bring it in to our facilities.     work from home that were 
                   In order to manage the             able to do so. This worked 
                   risks and adhere to government     well as our principal IT 
                   guidelines the Group had           systems are cloud based 
                   to change the method of            or accessible remotely. 
                   operation and implement            A proportion of our employees 
                   measures to mitigate the           were not able to work from 
                   risk.                              home as they need to access 
                                                      facilities at our Marchwood 
                                                      facility. To this end, the 
                                                      Group carried out risk assessments 
                                                      and put in place a dedicated 
                                                      `Covid Team', to ensure 
                                                      compliance of the implemented 
                                                      positive safety measures 
                                                      and to undertake a continual 
                                                      review of the effectiveness 
                                                      and relevance of such measures. 
                                                      Further risk assessments 
                                                      will be carried out if deemed 
                                                      necessary. 
                                                      A Covid policy that was 
                                                      communicated to staff remains 
                                                      in force. Signage around 
                                                      the building is displayed; 
                                                      to inform staff of maximum 
                                                      occupancy levels within 
                                                      certain areas of the building, 
                                                      as well as a reminder of 
                                                      social distancing and the 
                                                      frequency of hand washing. 
                                                      There has been an increase 
                                                      in the frequency and thoroughness 
                                                      of the cleaning provided 
                                                      by external contractors. 
                                                      All staff have been issued 
                                                      with a `Covid Pack', consisting 
                                                      of hand sanitisers, anti-bacterial 
                                                      wipes and face masks. Staff 
                                                      are consulted with about 
                                                      Covid and encouraged to 
                                                      raise any concerns. 
                 =================================  ==================================== 
 Cyber Security   Covid-19 has increased             Biome has effective cyber 
                   cyber threats from cyber           security controls and has 
                   criminals and other malicious      increased the focus on addressing 
                   groups who are targeting           security alerts as soon 
                   businesses by deploying            as they arise. Security 
                   Covid-19 related scams             education of employees has 
                   and phishing emails. Employees     been increased highlighting 
                   working from home have             security threats. 
                   also heightened cyber security 
                   risks. 
                 =================================  ==================================== 
 

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:

 
 Like-for-like comparisons                       2020             2019    Growth 
                                                GBP'm            GBP'm 
 Revenues 
 Bioplastics                                      4.9              3.0     65.4% 
 RF Technologies                                  0.8              4.0   (79.7%) 
 Reported Group revenues                          5.7              7.0   (17.3%) 
------------------------------------  ---------------  ---------------  -------- 
 (L)/EBITDA                                                   Restated 
 Bioplastics                                    (0.1)            (0.8) 
 RF Technologies                                (0.4)             0.8 
 Central Costs                                  (0.4)            (0.5) 
 Reported (L)/EBITDA                            (0.9)            (0.5) 
------------------------------------  ---------------  ---------------  -------- 
 less depreciation, amortisation 
  and equity share option charges:                            Restated 
 Bioplastics                                    (0.4)            (0.4) 
 RF Technologies                                (0.1)            (0.1) 
 Central Costs                                  (0.2)            (0.1) 
                                                (0.7)            (0.5) 
 (Loss)/Profit from Operations                                Restated 
 Bioplastics                                    (0.5)            (1.2) 
 RF Technologies                                (0.5)              0.7 
 Central Costs                                  (0.6)            (0.6) 
 Like-for-Like Operating Loss                   (1.6)           (1.0) 
------------------------------------  ---------------  ---------------  -------- 
 Net Assets 
 Non-current assets                               1.4              1.5 
 Inventories                                      0.7              0.6 
 Trade and other receivables                      1.6              1.9 
 Cash                                             1.7              2.1 
 Trade and other payables                       (1.1)            (1.5) 
 long term lease commitments                    (0.4)            (0.4) 
 Net assets                                      3.9               4.2 
------------------------------------  ---------------  ---------------  -------- 
 

Segmental information has been restated to allocate costs previously accounted for as Central Costs to Bioplastics and RF Technologies, see Note 2 for details.

Revenues

Reported Group revenues decreased in the year to GBP5.7m from GBP7.0m due to the absence of orders for fibre optic furnaces sold by the RF Technologies division exacerbated by lower demand for capital goods resulting from the recession caused by Covid-19. The Bioplastics division continued to see significant increases in revenues as customers see the benefits of compostable packaging particularly in the food and beverages sector.

(L)/EBITDA

Reported (Loss) / Earnings Before Interest, Taxation, Depreciation and Amortisation ((L)/EBITDA) for the year was a loss of GBP0.9m (2019: (GBP0.5m)). The increase in LBITDA is a direct result of the lower revenues in the RF Technologies division. This has been partially offset by increases in revenues in the Bioplastics division as well as reduced overhead costs.

Operating Profits/(Losses)

The Group recorded an operating loss for the year of GBP1.6m compared to an operating loss of GBP1.0m in the prior year.

Administrative costs across the Group in 2020 were GBP3.6m (2019: GBP4.5m). When the non-cash effects of depreciation, amortisation and equity settled share option charges are removed, the cash administrative expenses in 2020 decreased to GBP2.9m compared to prior year (2019: GBP4.0m). This decrease in expenses is mainly attributable to reductions in expenditure within the RF Technologies division, as costs were scaled back as a result of the lower activity levels, and savings made by senior directors / employees voluntarily accepting lower salaries to help mitigate the financial impact of Covid-19.

Investment in product research and development was GBP0.7m in the year (2019: GBP1.1m), which includes the research work in grant backed Industrial Biotechnology, of which GBP0.3m (2019: GBP0.3m) was capitalised in the year. The reduced level of research and development expenditure in the year was attributable to a reduction in the value of grant funded research activity. Tax R&D claims resulted in a credit being recognised in the year of GBP0.2m with cash being received after the year end (2019: credit of GBP0.1m).

The Group recorded a loss after tax for the year of GBP1.5m (2019: loss after tax of GBP0.9m), giving a basic loss per share of 51p (2019: loss per share of 35p).

Statement of Financial Position

The carrying value of intangible assets relates to capitalised development costs predominantly within the Biome Bioplastics division for development of the Group's own intellectual property and product range.

As at 31 December 2020, there was GBP0.8m of capitalised development costs (2019: GBP0.9m) within the Group's statement of financial position, of which GBP0.4m 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

 
                                                    2020                   2019 
                                                 GBP'000                GBP'000 
 Loss from operations                        (1,575)                (1,020) 
 adjustment for non-cash items                    658                    539 
 Movement in working capital                     (138)              (1,092) 
 Cash utilised by operations                 (1,055)                (1,573) 
 Investment activities                          (275)                  (303) 
 R&D Tax credit                                        -                 205 
 Interest paid                                    (38)                      (2) 
 Financing activities                             920                1,185 
 Net decrease in cash                           (448)                  (488) 
 Opening cash balance                     2,126                      2,614 
 Closing cash balance                          1,678                 2,126 
---------------------------------  ---------------------  --------------------- 
 

The cash utilised in operations, before working capital movements, was GBP0.9m (2019: cash utilisation of GBP0.5m). Working capital movements of GBP0.1m utilisation in the year reflected the increased utilisation in the Bioplastics division offset by a further unwind of working capital in the RF Technologies division.

Investment in the year in capitalised product development and capex was flat at GBP0.3m (2019: GBP0.3m). Financing activities principally represented the share issues in 2020 and 2019 with new shares in the Company raising GBP1.0m net of costs (2019: GBP1.2m). No R&D tax credits were received during 2020 as the claim for 2019 expenditure was not submitted until the end of the year (2019: GBP0.2m). Post year-end a payment of GBP0.2m was received in respect of 2019 R&D tax credits.

The resultant closing cash position was GBP1.7m (2019: GBP2.1m).

Going Concern

The Group has operated for a year under Covid-19 pandemic conditions and has had time to assess the impact that the pandemic has had on its business. During 2020, the Group and specifically the RF Technologies division has reduced its cost base. Further to that, the Company successfully raised additional funding of GBP1m (after expenses) by way of a placing and subscription of new equity completed in the second half of 2020.

The key business risks and conditions that may impact the Group's ability to continue as a going concern are the utilisation of existing resources to finance growth, investment and expenditure; the rates of growth and cash generated by group revenues, the timing of breakeven and positive cashflow generation and the ability to secure additional debt or equity financing in future if this became necessary. The primary area of judgement that the Board considered, in the going concern assessment, related to revenue expectations and visibility.

The Board was mindful of the guidance surrounding a severe but plausible assessment and, accordingly, considered a number of scenarios in revenue reduction against the original plans. A reverse stress test was constructed to identify at which point the Group might run out of its available cash. The test was designed specifically to understand how far revenue would need to fall short of the base case forecast and does not represent the directors view on current and projected trading. The test assumed the unlikely scenario that (a) demand for RF products would decline to a lower level than that seen in 2020 and (b) the sales growth achieved by Bioplastics during the second half of 2020 would not be repeated in the forecast period. For the reverse stress test, the Board specifically excluded any significant upsides to this scenario. This is despite strong incremental demand potential at both existing and new customers for the Group's Bioplastic products and excludes the potential of an improvement in the Fibre Optic furnace market. This most severe scenario also excludes any mitigating reduction in the cost base that the Board would clearly undertake in this event. In all scenarios modelled, including the reverse stress test, the Group has sufficient resources to operate and meet its liabilities throughout the going concern review period without the inclusion of the impact of mitigating actions.

At 31 December 2020, the Group had a net cash balance of GBP1.7m and as at 24 March 2021 a balance of GBP1.7m. The 31 December 2020 balance exceeded market forecast and the 24 March 2021 balance was better than predicted in all the going concern scenarios tested. On a revised base case scenario adopted for their assessment, the Board is comfortable that the Group can continue its operations for at least a 12-month period following the approval of these financial statements.

As a result of this review, which incorporated sensitivities and risk analysis, the Directors believe that the Group has sufficient resources and working capital to meet their present and foreseeable obligations for a period of at least 12 months from the approval of these financial statements.

By order of the Board.

Paul Mines

Chief Executive Officer

 
 Consolidated statement of comprehensive income 
 For the year ended 31 December 2020 
                                              Note             2020             2019 
                                                            GBP'000          GBP'000 
 
 REVENUE                                                  5,705          6,957 
 Cost of goods sold                                   (4,029)              (3,933) 
 GROSS PROFIT                                              1,676            3,024 
 Other operating income                                       300              436 
 Administrative expenses                                 (3,551)          (4,480) 
 LOSS FROM OPERATIONS                                    (1,575)          (1,020) 
 Investment income                                                2                6 
 Finance charges                                              (38)               (9) 
 Foreign exchange gain/(loss)                                 (88)                 - 
 LOSS BEFORE TAXATION                                   (1,699)           (1,023) 
 Taxation                                        6           155               146 
 LOSS AND TOTAL COMPREHENSIVE INCOME FOR 
  THE YEAR                                              (1,544)              (877) 
-------------------------------------------  -----  ---------------  --------------- 
 
 Basic loss per share - pence                    7      (51)p               (35)p 
 
 Diluted loss per share - pence                  7          (51)p             (35)p 
-------------------------------------------  -----  ---------------  --------------- 
 
 
 Consolidated statement of financial 
  position 
 as at 31 December 2020 
                                        Note              2020             2019 
                                                       GBP'000          GBP'000 
 NON-CURRENT ASSETS 
 Other intangible assets                   8              821               883 
 Property, plant and equipment             9              574               653 
                                                      1,395             1,536 
 CURRENT ASSETS 
 Inventories                                              746              555 
 Trade and other receivables              10          1,594             1,885 
 Cash and cash equivalents                            1,678             2,126 
                                                      4,018             4,566 
 TOTAL ASSETS                                         5,413            6,102 
-------------------------------------  -----  ----------------  --------------- 
 
 CURRENT LIABILITIES 
 Trade and other payables                 11          1,076            1,381 
 Lease liabilities                        12               38          76 
                                                     1,114             1,457 
 NON-CURRENT LIABILITIES 
 Lease liabilities                        12             400               438 
-------------------------------------  -----  ----------------  --------------- 
                                                         400               438 
 TOTAL LIABILITIES                                   1,514              1,895 
-------------------------------------  -----  ----------------  --------------- 
 NET ASSETS                                          3,899              4,207 
-------------------------------------  -----  ----------------  --------------- 
 EQUITY 
 Share capital                                           186               140 
 Share premium account                               2,200             1,250 
 Capital redemption reserve                                  4          4 
 Share options reserve                                   617               377 
 Translation reserves                           (85)                       (85) 
 Retained earnings                                       977           2,521 
 TOTAL EQUITY                                         3,899             4,207 
-------------------------------------  -----  ----------------  --------------- 
 

The financial statements were approved by the Board on 25 March 2021.

Signed on behalf of the Board of Directors

Paul Mines (Chief Executive)

Rob Smith (Chief Financial Officer)

25 March 2021

 
 Consolidated statement of changes in 
  equity 
 AS AST 31 
 DECEMBER 
 2020 
 
                                          Share          Capital           Share 
                          Share         premium       redemption         options         Translation         Retained           TOTAL 
                        capital         account          reserve         reserve             reserve         earnings          EQUITY 
                        GBP'000         GBP'000          GBP'000         GBP'000             GBP'000          GBP'000         GBP'000 
 Balance at 1 
  January 
  2020               140              1,250              4               377                  (85)          2,521           4,207 
---------------  --------------  --------------  ---------------  --------------  ------------------  ---------------  -------------- 
 Share options 
  issued 
  in share 
  based 
  payments                    -     -                        -           240                       -                -          240 
 Issue of share 
  capital                  46           950          -                        -                    -                -          996 
 Cancellation 
 of expired 
 options                      -               -                -              -                   -                 -               - 
 Transactions 
  with 
  owners                186          2,200                    4          617                  (85)         2,521            5,443 
---------------  --------------  --------------  ---------------  --------------  ------------------  ---------------  -------------- 
 Loss for the 
  year                       -               -                 -              -                   -     (1,544)          (1,544) 
---------------  --------------  --------------  ---------------  --------------  ------------------  ---------------  -------------- 
 Total 
  comprehensive 
  loss for the 
  year                      -                -                 -              -                   -     (1,544)          (1,544) 
---------------  --------------  --------------  ---------------  --------------  ------------------  ---------------  -------------- 
 Balance at 31 
  December 
  2020                  186         2,200                     4          617             (85)                977           3,899 
---------------  --------------  --------------  ---------------  --------------  ------------------  ---------------  -------------- 
 
 Balance at 1 
  January 
  2019                 118                77                  4          316                  (85)         3,323           3,753 
---------------  --------------  --------------  ---------------  --------------  ------------------  ---------------  -------------- 
 Share options 
  issued 
  in share 
  based 
  payments                  -                -                 -        136                        -               -          136 
 Issue of share 
  capital                22          1,173            -                      -                     -               -       1,195 
 Cancellation 
  of expired 
  options              -           -                    -                (75)                      -             75                 - 
 Transactions 
  with 
  owners            22             1,173                       -           61                      -             75        1,331 
---------------  --------------  --------------  ---------------  --------------  ------------------  ---------------  -------------- 
 Loss for the 
  year                -              -                         -               -                   -     (877)               (877) 
---------------  --------------  --------------  ---------------  --------------  ------------------  ---------------  -------------- 
 Total 
  comprehensive 
  income for 
  the year          -                  -                      -                -                  -        (877)             (877) 
---------------  --------------  --------------  ---------------  --------------  ------------------  ---------------  -------------- 
 Balance at 31 
  December 
  2019                140          1,250                      4          377                  (85)          2,521            4,207 
---------------  --------------  --------------  ---------------  --------------  ------------------  ---------------  -------------- 
 
 
 Consolidated statement of cash flows 
 For the year ended 31 December 2020 
                                                                  2020               2019 
                                                               GBP'000            GBP'000 
 Loss after taxation                                   (1,544)                   (877) 
 Adjustments for: - 
 Taxation                                                     (155)           (146) 
 Foreign exchange loss/(gain)                                     88                    - 
 Finance charges                                                  38                   9 
 Investment income                                                (2)                (6) 
---------------------------------------------------  -----------------  ----------------- 
 Loss from operations                                     (1,575)            (1,020) 
 Adjustments for: - 
 Amortisation and impairment of intangible 
  assets                                                       320                317 
 Depreciation of property, plant and equipment                   98                 77 
 Share based payments - equity settled                         240                136 
 Foreign exchange gain/(loss)                                       -                  9 
---------------------------------------------------  -----------------  ----------------- 
 Operating cash flows before movement in working 
  capital                                                    (917)          (481) 
 Decrease/(increase) in inventories                          (191)           400 
 Decrease/(increase) in receivables                            293            (1,087) 
 (Decrease)/increase in payables                             (240)               (405) 
 Cash utilised in operations                              (1,055)            (1,573) 
 Corporate tax received                                              -             205 
 Interest paid                                                  (38)                 (2) 
 Net cash outflow from operating activities                (1,093)            (1,370) 
---------------------------------------------------  -----------------  ----------------- 
 Investing activities 
 Interest received                                                  2                 6 
 Investment in in intangible assets                       (258)                  (282) 
 Purchase of property, plant and equipment                      (19)               (27) 
 Net cash used in investing activities                        (275)              (303) 
---------------------------------------------------  -----------------  ----------------- 
 Financing activities 
 Proceeds from issue of share capital                       1,100               1,300 
 Costs of issue of ordinary share capital                     (104)              (104) 
 Repayment of obligations under leasing activities              (76)               (11) 
 Net cash from financing activities                             920            1,185 
---------------------------------------------------  -----------------  ----------------- 
 Net decrease in cash and cash equivalents                    (448)           (488) 
 Cash and cash equivalents at the beginning 
  of the year                                               2,126              2,614 
 Cash and cash equivalents at the end of the 
  year                                                      1,678              2,126 
---------------------------------------------------  -----------------  ----------------- 
 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 December 2020

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 2020 or 2019 but is derived from those financial statements. Statutory financial statements for 2019 have been delivered to the Registrar of Companies. Those for 2020 will be delivered following the Company's Annual General Meeting on 21 April 2021. 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 2020 were authorised for issue by the Board of Directors on 24 April 2020 and the statement of financial position was signed on behalf of the Board by Paul Mines and Rob Smith.

2. BASIS OF PREPARATION

The Group's financial statements have been prepared in accordance with International accounting standards in conformity with the requirements of the Companies Act 2006.

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 2020. 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 2020 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.

4. SEGMENTAL INFORMATION FOR YEARED 31 DECEMBER 2020

 
                                                            2020                                                          2019 (Restated)* 
                                         GBP'000        GBP'000           GBP'000       GBP'000           GBP'000        GBP'000           GBP'000          GBP'000 
                                     Bioplastics             RF           Central         Total       Bioplastics             RF           Central            Total 
 Revenue from sales                        4,946            804                 -         5,750             2,991          3,966                 -            6,957 
 Removal of inter-segment 
  sales                                        -           (45)                 -          (45)                 -              -                 -                - 
 Total external sales                      4,946            759                 -         5,705             2,991          3,966                 -            6,957 
---------------------------  -------------------  -------------  ----------------  ------------  ----------------  -------------  ----------------  --------------- 
 
 (Loss)/profit from 
  operations                               (517)          (461)             (597)       (1,575)           (1,176)            748             (592)          (1,020) 
---------------------------  -------------------  -------------  ----------------  ------------  ----------------  -------------  ----------------  --------------- 
 Interest received                             -              -                 2             2                 -              -                 6                6 
 Finance charges                               -              -              (38)          (38)                 -              -               (9)              (9) 
 Foreign exchange loss                      (88)              -                 -          (88)                 -              -                 -                - 
 Loss before taxation                      (605)          (461)             (633)       (1,699)           (1,176)            748             (595)          (1,023) 
---------------------------  -------------------  -------------  ----------------  ------------  ----------------  -------------  ----------------  --------------- 
 Taxation                                    155              -                 -           155               146              -                 -              146 
 Loss for the year                         (450)          (461)             (633)       (1,544)           (1,030)            748             (595)            (877) 
---------------------------  -------------------  -------------  ----------------  ------------  ----------------  -------------  ----------------  --------------- 
 
 Reconciliation to Loss Before Interest Tax Depreciation 
  and Amortisation (LBITDA) 
 (Loss)/profit from 
  operations                               (517)          (461)             (597)       (1,575)           (1,176)            748             (592)          (1,020) 
 Depreciation/amortisation                 (364)           (50)               (4)         (418)             (340)           (52)               (2)            (394) 
 Share based payments                       (35)           (16)             (189)         (240)              (17)           (22)              (97)            (136) 
 LBITDA                                    (118)          (395)             (404)         (917)             (819)            822             (493)            (490) 
---------------------------  -------------------  -------------  ----------------  ------------  ----------------  -------------  ----------------  --------------- 
 
 Other segmental 
 information 
 Capital Expenditure 
 Property, plant and 
  equipment                                    9              9                 1            19               254            265                26              545 
 Intangible assets                           258              -                 -           258               320              -                 -              320 
 Total Capital Expenditure                   267              9                 1           277               574            265                26              865 
---------------------------  -------------------  -------------  ----------------  ------------  ----------------  -------------  ----------------  --------------- 
 
 Total Assets                              3,886          1,414               113         5,413             3,291          2,183               628            6,102 
---------------------------  -------------------  -------------  ----------------  ------------  ----------------  -------------  ----------------  --------------- 
 
 

The Bioplastics division comprises of Biome Bioplastics Limited and Aquasol Limited.

*During 2020 the board concluded that, to gain a more accurate representation of the costs and profits associated with Bioplastics and RF Technologies, certain costs previously accounted for as part of the Central division would be allocated, to the operating divisions. These costs include insurance, accounting, administration, facilities, and executive management activities attributable to the operating divisions. A restatement of segmental information for 2019 has been made to allow users of these account to compare information on a consistent basis.

5. (LOSS)/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, depreciation, and amortisation. The Group (L)/EBITDA is reconciled as follows:

 
 (L)/EBITDA                                          2020            2019 
                                                  GBP'000         GBP'000 
 Loss from operations per consolidated 
  statement of comprehensive income               (1,575)        (1,020) 
 Amortisation                                        320              317 
 Depreciation                                          98     77 
 Share option charges - equity 
  settled                                            240              136 
                                                   (917)            (490) 
 ---------------------------------------  ---------------  -------------- 
 

6. TAXATION

The Group's normal policy is to recognise tax credits resulting from tax R&D claims on a cash received basis. However, the claim in respect of the year ended 31 December 2019 was not received until after the year-end but was settled prior to the report date the value has been accrued as if received in 2020. A tax credit has, therefore, been recognised in the Group's financial statements in respect of that claim.

7. EARNINGS PER SHARE

The calculation of loss per share is based on the loss attributable to the equity holders of the parent for the year of GBP1,544,000 (2019: loss of GBP877,000) and a weighted average of 3,033,457 (2019: 2,472,038) ordinary shares in issue for basic earnings per share and a weighted average of 3,033,457 (2019: 2,472,038) ordinary shares in issue for diluted earnings per share.

8. OTHER INTANGIBLE ASSETS

During the year there was a capitalisation of GBP258,000 of product development costs (2019: GBP282,000). The amortisation charge for the year was GBP320,000 (2019: GBP317,000).

9. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment of GBP19,000 were acquired in the year (2019: GBP545,000 of which GBP518,000 was in respect of right of use assets capitalised in accordance with IFRS 16). The depreciation charge for the year was GBP98,000 (2019: GBP77,000).

10. TRADE AND OTHER RECEIVABLES

Trade and other receivables reduced in the year due to lower sales within the RF Technologies division.

11. TRADE AND OTHER PAYABLES

Trade and other payables decreased in the year due mainly to lower levels of sales revenue resulting in lower purchases of materials and reduced customer deposits within the RF Technologies division compared to the prior year.

12. LEASE LIABILITIES

IFRS 16 was adopted in the year ending 31 December 2019. The leases have been reflected on the statement of financial position under property, plant and equipment as right-of-use assets as follows:

 
                              Opening                         Depreciation              Closing 
                           Book Value             Additions         Charge           book value 
                              GBP'000               GBP'000        GBP'000              GBP'000 
 Premises                        483              -                (21)                   462 
 Motor vehicles                    13                     -        (12)                       1 
 Total                           496                      -        (33)                  463 
-----------------  ------------------  --------------------  -------------  ------------------- 
 

Lease liabilities are presented in the statement of financial position as follow:

 
                                                                        GBP'000 
 Lease liability as at 1 January 
  2020                                                                   514 
 New leases entered into during 
  the year                                                                    - 
 Interest charged during the 
  year                                                                     38 
 Payments made during the 
  year                                                                 (114) 
 Lease liability as at 31 
  December 2020                                                          438 
------------------------------------  -------------------  -------------------- 
 
                                                     2020                  2019 
                                                  GBP'000               GBP'000 
 Lease liability payable in 
  less than a year                                     38             76 
 Lease liability payable in 
  more than one year                                400                  438 
 Total                                              438                  514 
------------------------------------  -------------------  -------------------- 
 

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(END) Dow Jones Newswires

March 25, 2021 03:01 ET (07:01 GMT)