TIDMBIOM

RNS Number : 7810L

Biome Technologies PLC

15 September 2021

This announcement contains inside information for the purposes of Regulation 11 of the Market Abuse (Amendment) (EU Exit) Regulations 2019/310. With the publication of this announcement, this information is now considered to be in the public domain.

15 September 2021

Biome Technologies plc

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

Interim Results

Biome Technologies plc announces its unaudited Interim Results for the six months ended 30 June 2021.

Highlights

-- The Group generated revenues of GBP2.6m (H1 2020: GBP2.5m) and gross profit of GBP0.9m (H1 2020: GBP0.8m)

-- The Biome Bioplastics division was the principal revenue generator for the Group, with growth of 7.3% on H1 2020 despite the logistics disruption caused by ongoing issues in the global shipping industry

-- Biome Bioplastics continued to grow its end-customer base and received a contractual commitment to accelerate the commercialisation of its proprietary compostable filtration mesh with a US customer. Whilst implementation was constrained by a site utility issue, an engineering solution is being implemented and we expect to see the acceleration of offtake during Q4 2021

-- The Stanelco RF Technologies division saw tendering activity increase, contract wins in induction heating and an improvement in the leading demand indicators of the cyclical fibre optic market

-- Current trading continues in line with the Board's expectations set out in the trading updates of 1 and 29 July 2021

Paul Mines, Chief Executive Officer said:

"We continue to see a healthy level of orders and enquiries for Biome Bioplastics' products and our opportunity pipeline is increasing. The ongoing delays in shipping and transportation constrained the first half and we have been investing in inventory to mitigate the effects as we progress through H2. Demand for our biodegradable filtration mesh from our new end-customer is already encouraging and the further conversion of this customer in Q4 2021 should provide significant long-term benefits. We continue to trade in line with the Board's expectations set out in the trading updates of 1 and 29 July 2021."

For further information please contact:

Biome Technologies plc

Paul Mines, Chief Executive Officer

Rob Smith, Chief Financial Officer

Tel: +44 (0) 2380 867 100

info@biometechnologiesplc.co.uk

Allenby Capital

David Hart/Alex Brearley (Nominated Adviser)

Kelly Gardiner (Sales and Corporate Broking)

Tel: +44 (0) 20 3328 5656

About Biome

Biome Technologies plc (Ticker: BIOM) 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 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 Group comprises two divisions, Biome Bioplastics Limited and Stanelco RF Technologies Limited. 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

#ThinkBioplastic is our digital educational platform, launched in October 2018 in response to the emerging global plastic conversation. It speaks to a wide audience, highlighting bioplastics as a leading solution to reduce the negative impact of plastic manufacture and disposal. Following the much acclaimed first series of short videos, the second series was recently released.

Chairman's Statement

During the first half of 2021, the Group's two divisions saw a continuance of recent trends. An increase in revenue in the Biome Bioplastics Division ("Bioplastics"), with a slight decrease in sales in Stanelco RF Technologies Division ("RF Technologies"), resulted in Group revenues for the period of GBP2.6m, slightly ahead of the previous half year (H1 2020: GBP2.5m).

Encouragingly, we have seen a continuance of improving sales enquiry levels, with a notable customer win for Bioplastics and an upturn in enquiries and tender activity in RF Technologies. However, we, like many businesses, have been constrained by the disruption in the international sea container industry affecting Bioplastics and to a lesser extent a shortage of electronic components for RF Technologies. The direct effect of Covid 19 have been marginal on both divisions.

Gross profit for the Group was GBP0.9m (H1 2020: GBP0.8m) reflecting the improved revenues. The overall gross margin for the Group was 33% (H1 2020: 30%) reflecting an improved mix of product sales in the first half of the year.

Administrative expenses continued to be tightly controlled in the period and were broadly in line with the first half of 2020 at GBP1.7m (H1 2020 restated: GBP1.6m). The Group recorded a loss before interest, depreciation, amortisation and share option charges for the six months to 30 June 2021 of GBP0.5m (H1 2020 restated: GBP0.4m loss)(1) . The loss after taxation was GBP0.7m (H1 2020: GBP0.8m loss), which equates to a loss per share of 19 pence on both a basic and diluted basis (H1 2020: loss per share of 29 pence on a basic and diluted basis).

The Group's cash position as at 30 June 2021 was GBP1.4m (31 December 2020: GBP1.7m) reflecting the first half's losses. As at 30 June 2021, the Group continued to have no external bank borrowings.

(1) Loss before interest, taxation, depreciation and amortisation is an alternative profit measure as detailed in Note 7.

Biome Bioplastics Division

Revenues in Bioplastics reflected increasing demand for biodegradable plastics. Sales for H1 2021 of GBP2.3m (H1 2020: GBP2.1m) represented an increase of 7.3% when compared to the corresponding period in the prior year.

The performance in the period was underpinned by a continuance of sales of outer packaging for the US coffee market and by growing revenues for rigid ring materials for coffee-pod applications.

A major milestone in the period was the receipt of a contractual commitment from a second US end customer for conversion to our biodegradable filtration material. This was referred to in our trading updates of 1 and 29 July 2021, where we reported that this implementation had been constrained by an issue relating to the provision of a utility. An engineering solution addressing this constraint is now underway and our understanding is that the work required will be completed shortly and that we can expect to see the acceleration of offtake during Q4 2021.

The division's opportunity pipeline has continued to expand, with sales to existing customers being supplemented with development work together with sample and pre-production sales being made in H1 2021 to a greater number of customers both in North America and the UK. We anticipate a number of these opportunities moving into larger scale production during H2 2021 underwriting our growth expectations.

These prospects include:

-- Filtration mesh - implementation is underway with a second end-use customer in the coffee filtration market

-- Coffee pod material - the Company's heat stable material, developed for coffee pods, is attracting new customers within the US market and commercial sales of this product are gaining momentum

-- 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 and one is in the UK

-- Tree shelters (see below) - favourable market feedback is leading to accelerated development activity and initial production is planned for H2 2021.

In H1 2021, the division announced that it had secured GBP248,000 of further Innovate UK funding to complete the development phase and reach commercial production of its biodegradable tree shelter project. Activity on this project accelerated significantly in the period, in cooperation with Suregreen, a UK end customer. With further extensive laboratory testing of materials now completed, UK-wide field trials are expected to commence later this year.

Stanelco RF Technologies Division

Revenues for the first half of 2021 in RF Technologies were GBP0.3m (H1 2020: GBP0.4m).

The cyclical downturn in the demand for furnaces used in the manufacture of fibre optic cable, first seen in 2018, has continued to limit the opportunities for RF Technologies. However, during the first half we saw customers increasing orders for spares and some early signs that the fibre optic market is seeing recovery with reduced inventory and higher pricing for fibre optic cable being reported. We have provided quotations to a number of our long-established clients as they begin to consider further capacity expansion. We are encouraged by the improvement in these leading indicators.

The division has made a concerted effort to gain new customers for induction heating and welding equipment from various end markets in the UK and continental Europe. Some encouraging new orders have been received, from large customers, for delivery in H2 2021.

The division continues to keep a tight rein on costs and cash whilst maintaining its operational capability to meet future demand.

KPI Targets

The Board restated its ambitious Key Performance Indicators ("KPIs") for the period to 2023 in the 2020 interim report published on 24 September 2020. These KPIs considered the effects of the Covid-19 Pandemic to the extent that these were known at that point in time and the cyclical downturn in the fibre optic manufacturing industry.

Whilst H1 2021 saw relatively modest gains, we remain committed to the delivery of these targets and continue to strive to meet them over the required period. The KPI targets remain: -

   --     40% annual revenue growth in Bioplastics 

-- Bioplastics profitable revenue growth to achieve a 10%-12.5% EBITDA margin by the end of the KPI period

-- 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

-- 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 Board will continue to measure the Group's performance against these KPIs and report to shareholders annually on progress.

Outlook

Current trading continues in line with the Board's expectations referred to in the trading updates of 1 and 29 July 2021.

Positive progress continues in Bioplastics. Order intake has been good and as the engineering limitations are removed at our second end customer for filtration mesh and as global sea container freight normalises, we expect to see sales growth accelerate.

The prospects for RF Technologies in 2021 will remain constrained, but with a reasonable expectation for an improvement in order intake in H2 2021 and the potential for an improved outlook for 2022.

John Standen

Chairman

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 
 For the period ended 30 June 2021 
                                                        6 Months              6 Months                 Year 
                                                           Ended                 Ended                Ended 
                                                         30 June               30 June          31 December 
                                      Note                  2021                  2020                 2020 
                                                                              Restated             Restated 
                                                       Unaudited             Unaudited              Audited 
                                                         GBP'000               GBP'000              GBP'000 
-----------------------------------  -----  --------------------  --------------------  ------------------- 
 Revenue                               5            2,589                   2,500                 5,705 
   Cost of goods sold                               (1,731)               (1,746)               (4,029) 
                                            --------------------  --------------------  ------------------- 
 Gross Profit                                            858                   754                1,676 
   Other operating income                                110                     87                  300 
   Administrative expenses                          (1,739)               (1,645)               (3,639) 
                                            --------------------  --------------------  ------------------- 
 Loss from operations                                   (771)                 (804)             (1,663) 
   Investment income                                           -                    2                     2 
   Finance and similar charges                            (19)                  (19)                  (38) 
                                            --------------------  --------------------  ------------------- 
 Loss before taxation                                   (790)                 (821)             (1,699) 
   Taxation                                                 90                       -               155 
 Total comprehensive loss for the 
  period                                                (700)                 (821)             (1,544) 
                                            --------------------  --------------------  ------------------- 
 
 Basic loss per share - pence                           (19)p                 (29)p                 (51)p 
 Diluted loss per share - pence                         (19)p                 (29)p                 (51)p 
 
 Restatement 
 The consolidated statement of comprehensive income has been 
  restated to include foreign exchange gains and losses as part 
  of administrative expenses. 
----------------------------------------------------------------------------------------------------------- 
 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 
 As at 30 June 2021 
                                                      At                     At                     At 
                                                 30 June                30 June            31 December 
                                                    2021                   2020                   2020 
                                                                                              Restated 
                                               Unaudited              Unaudited                Audited 
                                                 GBP'000                GBP'000                GBP'000 
---------------------------------  ---------------------  ---------------------  --------------------- 
 NON-CURRENT ASSETS 
   Other intangible assets                          797                    778                    821 
   Property, plant and equipment                    541                    611                    574 
                                   ---------------------  ---------------------  --------------------- 
                                               1,338                    1,389                  1,395 
 CURRENT ASSETS 
   Inventories                                  1,205                      997                    746 
   Trade and other receivables                  1,228                   1,781                  1,439 
   Taxation receivable                                90                 -                        155 
   Cash and cash equivalents                    1,390                   1,074                  1,678 
                                   ---------------------  ---------------------  --------------------- 
                                                3,913                   3,852                  4,018 
 
 TOTAL ASSETS                                   5,251                   5,241                  5,413 
                                   ---------------------  ---------------------  --------------------- 
 CURRENT LIABILITIES 
   Trade and other payables                   (1,587)                (1,245)                (1,076) 
   Lease liabilities                                (43)                   (35)                   (38) 
                                   ---------------------  ---------------------  --------------------- 
                                              (1,630)                (1,280)                (1,114) 
 NON-CURRENT LIABILITIES 
   Lease liabilities                             (381)                  (401)                  (400) 
                                   ---------------------  ---------------------  --------------------- 
                                                 (381)                  (401)                  (400) 
 
 TOTAL LIABILITIES                          (2,011)                  (1,681)                (1,514) 
                                   ---------------------  ---------------------  --------------------- 
 
 NET ASSETS                                      3,240                  3,560                  3,899 
                                   ---------------------  ---------------------  --------------------- 
 
 
 CONSOLIDATED STATEMENT OF FINANCIAL POSITION continued 
 As at 30 June 2021 
                                                   At                    At                       At 
                                              30 June               30 June              31 December 
                                                 2021                  2020                     2020 
                                                                                            Restated 
                                            Unaudited             Unaudited                  Audited 
                                              GBP'000               GBP'000                  GBP'000 
------------------------------  ---------------------  --------------------  ----------------------- 
 EQUITY 
   Share capital                            189                        140                    186 
   Share premium                           2,283                  1,250           2,200 
   Capital redemption reserve                   4                   4                              4 
   Share options reserve                   647                         548                    617 
   Translation reserve                           (85)              (85)                       (85) 
   Treasury shares reserve                       (55)                 -                          - 
   Retained earnings                          257                   1,703                     977 
 TOTAL EQUITY                               3,240                     3,560                3,899 
                                ---------------------  --------------------  ----------------------- 
 
 Restatement 
 The consolidated statement of financial position has been 
  restated to disclose taxation receivable as a separate amount 
  in the position as at 31 December 2020, previously it was 
  included within trade and other receivables. 
---------------------------------------------------------------------------------------------------- 
 

The interim statements were approved by the Board on 14 September 2021.

Signed on behalf of the Board of Directors

Paul R Mines

Chief Executive

CONSOLIDATED STATEMENT OF CASH FLOWS

 
 For the period ended 30 June 2021 
                                                                At                     At                      At 
                                                           30 June                30 June             31 December 
                                                              2021                   2020                    2020 
                                                                                 Restated                Restated 
                                                         Unaudited              Unaudited                 Audited 
                                                           GBP'000                GBP'000                 GBP'000 
-------------------------------------------  ---------------------  ---------------------  ---------------------- 
 Loss after taxation:                                       (700)                 (821)               (1,544) 
 Adjustments for: - 
   Taxation                                                   (90)                     -                 (155) 
   Finance charges                                      19                            19                     38 
   Investment income                                             -               (2)                          (2) 
                                             ---------------------  ---------------------  ---------------------- 
 Loss from operations                                      (771)                  (804)               (1,663) 
 Adjustments for: - 
   Amortisation and impairment of 
    intangible assets                                        169                   142                     320 
   Depreciation of property, plant 
    and equipment                                              44                    44                      98 
   Share based payments - equity settled                       38                  170                  240 
                                             ---------------------  ---------------------  ---------------------- 
 Operating cash flows before movement 
  in working capital                                       (520)                 (448)            (1,005) 
   (Increase)/decrease in inventories                      (459)                 (442)               (191) 
   Decrease in receivables                                  211              104                           293 
   Increase/(decrease) in payables                          538                  (214)              (152) 
                                             --------------------- 
 Cash utilised in operations                               (230)              (1,000)             (1,055) 
   Taxation received                                 155                              -              - 
   Interest paid                                             (19)                     -                  (38) 
                                                                    ---------------------  ---------------------- 
 Net cashflow from operating activities                      (94)             (1,000)             (1,093) 
                                             ---------------------  ---------------------  ---------------------- 
 Investing activities 
   Interest received                                           -                        2                      2 
   Investment in intangible assets                        (145)                     (37)        (258) 
   Purchase of property, plant and 
    equipment                                                (10)                     (2)               (19) 
 Net cash used in investing activities                     (155)                    (37)                (275) 
                                             ---------------------  ---------------------  ---------------------- 
 Financing activities 
   Proceeds from issue of share capital                          1                    -                1,100 
   Costs of issue of ordinary share 
    capital                                                     -                     -             (104) 
   Repayment of obligations under 
    leasing activities                                       (40)                   (15)               (76) 
 Net cash from financing activities                          (39)                   (15)                  920 
                                             ---------------------  ---------------------  ---------------------- 
 
 Net decrease in cash and cash equivalents                 (288)               (1,052)                (448) 
 Cash and cash equivalents at the 
  beginning of the period                                1,678                  2,126                2,126 
 Cash and cash equivalents at the 
  end of the period                                      1,390                  1,074                  1,678 
                                             ---------------------  ---------------------  ---------------------- 
 
 Restatement 
 The consolidated statement of cash flows has been restated 
  to reflect the inclusion of foreign exchange gains and losses 
  as part of administrative expenses. 
----------------------------------------------------------------------------------------------------------------- 
 

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the period ended 30 June 2021

1. CORPORATE INFORMATION

The financial information for the year ended 31 December 2020 set out in this interim report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The Group's statutory financial statements for the year ended 31 December 2020 have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain statements under Section 498 of the Companies Act 2006. The interim results are unaudited. Biome Technologies plc is a public limited company incorporated and domiciled in England & Wales. The Company's ordinary shares are publicly traded on the AIM market of the London Stock Exchange.

2. BASIS OF PREPARATION

These interim consolidated financial statements (the interim financial statements) are for the six months ended 30 June 2021. They have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006. They do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2020.

These interim financial statements have been prepared in accordance with the accounting policies adopted in the last annual financial statements for the year to 31 December 2020, save that: -

-- The consolidated statement of comprehensive income has been restated to include foreign exchange gains and losses as part of administrative expenses for the period ending 30 June 2020 and the year ending 31 December 2020, and

-- The consolidated statement of financial position has been restated to disclose taxation receivable as a separate amount as at 31 December 2020, previously it was included within trade and other receivables.

The accounting policies have been applied consistently throughout the Group for the purposes of preparation of the interim financial statements.

3. BASIS OF CONSOLIDATION

The Group's interim financial statements consolidate the results of the Company and all of its subsidiary undertakings drawn up to 30 June 2021. As at 30 June 2021, the subsidiary undertakings were Biome Bioplastics Limited, Stanelco RF Technologies Limited, Aquasol Limited and InGel Technologies Limited.

4. GOING CONCERN

The Directors have reviewed forecasts for the period to December 2022. These have been prepared with appropriate regard for the current macroeconomic environment including the ongoing impact of Covid-19 and the circumstances in which the Group operates. In particular, the Directors have considered the continuing growth of the Bioplastics Division, its need for continued investment in development resource and working capital, the steps they can take to improve the efficiency of the working capital deployed and the availability of future funding.

The model has assumed growth in the period from the Stanelco RF Division and the Directors have already taken steps to ensure resources meet current demand.

The Directors are satisfied that the Group has sufficient resources to continue in operational existence for at least one year from the date of approval of these Interim Results.

5. SEGMENTAL INFORMATION

Revenue from external customers

 
                                                   6 Months                 6 Months                     Year 
                                                      Ended                    Ended                    Ended 
                                                    30 June                  30 June              31 December 
                                                       2021                     2020                     2020 
                                                  Unaudited                Unaudited                  Audited 
                                                    GBP'000                  GBP'000                  GBP'000 
----------------------------------  -----------------------  -----------------------  ----------------------- 
Biome Bioplastics Division                          2,271                     2,117                    4,946 
Stanelco RF Technologies Division                       318                      383                      759 
                                    -----------------------  -----------------------  ----------------------- 
Total Revenue                                       2,589                     2,500                    5,705 
                                    -----------------------  -----------------------  ----------------------- 
 

6. LOSS PER SHARE

The calculation of basic earnings per share is based on the loss attributable to the equity holders of the parent for the period of GBP700,000 (H1 2020: loss of GBP821,000, FY 2020: loss of GBP1,544,000) and a weighted average of 3,729,257 ordinary shares in issue (H1 2020: 2,798,525, FY 2020: 3,035,740). The calculation uses the same weighted average number of shares under the basic and diluted basis in the current and comparative periods due to a loss being made.

7. ALTERNATIVE PROFIT MEASURE

The Group measures and reports on Earnings (Loss) Before Interest, Taxation, Amortisation and Depreciation (E(L)BITDA). The following table sets out the calculation of E(L)BITDA.

 
                                               6 Months              6 Months                      Year 
                                                  Ended                 Ended                     Ended 
                                                30 June               30 June               31 December 
                                                   2021                  2020                      2020 
                                               GBP'000s              GBP'000s                  GBP'000s 
 Loss from operations                            (771)                 (804)                  (1,663) 
   Depreciation                                      44                    44                        98 
   Amortisation                                   169                    142                      320 
   Share based payments                              38                 170                       240 
 Loss Before Interest, Taxation, 
  Depreciation and Amortisation                  (520)                 (448)                  (1,005) 
                                   --------------------  --------------------  ------------------------ 
 

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