TIDMBIOM
RNS Number : 2206A
Biome Technologies PLC
22 September 2022
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.
22 September 2022
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 2022.
Highlights
-- The Group generated revenues of GBP2.4m (H1 2021: GBP2.6m)
and gross profit of GBP0.9m (H1 2021: GBP0.9m)
-- The Biome Bioplastics division was the principal revenue
generator for the Group. However, raw material availability limited
revenues achieved in H1
-- New customers for Biome Bioplastics, gained in the last few
years in both North America and Europe, grew three-fold in terms of
revenue contribution in the period and now count for 32% of
revenues (H1 2021: 10%)
-- Anticipated H2 2022 revenues from Biome Bioplastics'
increased supply of biodegradable coffee filter material to a
second large US customer are now expected to be significantly lower
than previously anticipated, impacting expected revenues from this
customer in 2022 and 2023
-- Biome Bioplastics is also experiencing other customer launch
delays related to raw material supply, logistics and uncertainty of
end-consumer behaviour in the current economic climate, all of
which have and will have an impact on the revenue generation of
this division
-- The Stanelco RF Technologies division is working to deliver
the major contracts announced previously. Elongated lead-times for
critical components, particularly electronics, have delayed some
shipments. However, key issues have been resolved and these
shipments have or are expected to occur in H2 2022 with revenues
from this division in the second half expected to be above previous
Board expectations
-- The Board now believes that Group revenues for the years
ending 31 December 2022 and 2023 will be substantially below
current market expectations with a consequential substantial impact
on the Group's loss/profit before interest, taxation, depreciation,
amortisation and share option charges in those years
-- Despite trading conditions deteriorating significantly, the
Board believes the Group has sufficient working capital for the
foreseeable future
-- Accounts receivable financing agreement signed in August 2022
provides new working capital finance of up to GBP600k as
required
ul Mines, Chief Executive Officer said:
"Growth has been limited in both divisions in the first half by
ongoing supply challenges. The trading environment for Biome
Bioplastics is becoming more difficult with a number of factors
impacting our revenue expectations for this year and 2023. We
continue to work with our customers on new products that we believe
will unlock more value and I am particularly encouraged by the
diversification of our customer base and applications in both
divisions."
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
Chairman's Statement
As mentioned in our last trading update, the Group's two
divisions were challenged by supply constraints in the global
economy during the first half of 2022. For the Biome Bioplastics
Division ("Bioplastics") the realisation of ambition was limited by
the challenges of procuring raw materials in a timely manner and by
end-customers struggling with their own production schedules. For
Stanelco RF Technologies Division ("RF Technologies") the problems
related to sourcing specific electronic components and
sub-assemblies, which limited revenues despite a good order book
backlog. The net result was Group revenues for the period of
GBP2.4m, slightly behind the previous half year (H1 2021:
GBP2.6m).
Gross profit for the Group was GBP0.9m (H1 2021: GBP0.9m) on the
back of improved margins and mix of sales. Other income, in the
form of grant receipts in support of the Group's work on novel
bioplastics, was GBP0.2m (H1 2021: GBP0.1m). The overall gross
margin for the Group rose to 36% (H1 2021: 33%) reflecting an
improved mix of product sales and tight controls on purchase
pricing in both divisions.
Despite the context of inflationary pressures, administrative
expenses continued to be tightly controlled in the period and were
in line with the first half of 2021 at GBP1.7m (H1 2021: GBP1.7m).
The Group recorded a loss before interest, depreciation,
amortisation and share option charges for the six months to 30 June
2022 of GBP0.4m (H1 2021: GBP0.5m loss)(1) . The loss after
taxation was GBP0.6m (H1 2021: GBP0.7m loss), which equates to a
loss per share of 17 pence on both a basic and diluted basis (H1
2021: loss per share of 19 pence on a basic and diluted basis).
The Group's cash position as at 30 June 2022 was GBP0.7m (31
December 2021: GBP1.0m) reflecting the first half's losses. As at
30 June 2022, the Group continued to have no external bank
borrowings. Post period end, we were pleased to announce that the
Group has entered into a receivables financing agreement with
Accelerated Payments Limited.
Revenues in Bioplastics for the period fell just short of
internal expectations as the late delivery of raw materials to one
of the North American manufacturing sites limited the realisation
of some revenues towards the end of the second quarter. Sales for
H1 2022 of GBP2.0m (H1 2021: GBP2.3m) represented a decrease of
10.6% when compared to the corresponding period in the prior
year.
We are seeing some easing of the logistics issues that have
limited the business in the last 18 months albeit our customers are
experiencing volatility in their own production schedules and are
struggling to launch new products on defined timescales into
markets in which there is considerable demand and pricing
variability.
The revenue performance in the period remained underpinned by a
continuance of sales to existing customers for outer packaging for
the US coffee market, albeit limited by supply chain issues and
stocking reductions. However, of note is that revenues to new
customers in both North America and Europe grew three-fold in the
period and now represent 32% of revenues (H1 2021: 10%). A number
of these new customers are in the packaging film area where the
Company has been 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.
In the first half of 2021, the business received a contractual
commitment from a second US end customer for conversion to our
biodegradable coffee filtration material. This has been referred to
in various trading statements. Whilst initial implementation
proceeded well and the end customer has been purchasing regularly
in the past year, the subsequent acceleration of revenues has been
constrained by various engineering matters within the customer's
facilities. After some work, we understand that these engineering
constraints have been addressed and we appear to be moving forward
again, albeit not at the pace previously envisaged.
In the winter of 2021/22 Biome launched materials designed to
allow tree shelters (plastic tubes around saplings) to be left in
the forest after use to biodegrade in a benign manner. Last year,
Biome announced the commencement of large-scale, UK-wide field
testing and initial commercial sales by Suregreen Ltd (Biome's UK
commercial partner) of biodegradable tree shelters using Biome's
proprietary bioplastics materials. Based on extensive field testing
of nearly 40,000 shelters, the Company is pleased that the
real-world biodegradable product has performed exactly as
expected.
Biome's scientists took samples of the biodegradable tree
shelters this summer and tested them for mechanical properties and
overall product performance. The product's tubes remain strong and
resistant, degrading at the expected rate for their respective time
periods. Comparing these lab-based field trial results against the
Company's predictive models showed that the biodegradable tree
shelters also performed as well as conventional counterparts. After
this considerable piece of product performance monitoring work, the
business is now preparing for a larger promotional campaign for the
2022/23 winter planting season in association with Suregreen Ltd
(UK commercial partner).
The Bioplastics division will continue to benefit from the move
to more sustainable materials. Future near-term growth is expected
to be underpinned by several of the Division's customers which are
planning product launches in H1 2023. Some of these launches are
based on our new "home compostable" bio-based and biodegradable
plastic grades ('BiomeHC') that are subject to the protection of a
pending patent. The key "end-of-life" functionality of such
materials is that they degrade much faster in conditions akin to a
home compost bin rather than those materials designed to biodegrade
in the controlled and higher temperature environments of industrial
composting facilities. Biome's team has been working on this new
range of materials for some three years and they are now ready for
commercial service with a number of customers.
However, notwithstanding the various positive matters and
initiatives described above, Biome Bioplastics is experiencing
various customer launch delays related to raw material supply,
logistics and uncertainty of end-consumer behaviour in the current
economic climate. Some of these delays are significant and
considered unlikely to resolve quickly, resulting in the Board's
conclusion that Group revenues for the years ending 31 December
2022 and 2023 will be substantially below current market
expectations.
Stanelco RF Technologies Division
Revenues for the first half of 2022 in RF Technologies were
GBP0.4m (H1 2021: GBP0.3m), representing an increase of 24.8%.
The RF Technologies division has made good progress in securing
business both in the latter half of 2021 and during H1 2022 across
different industry sectors including food packaging and medical
applications. In addition, we won a contract for two fibre-optic
furnaces in late 2021 that are due for shipment in 2022. Like many
businesses we have seen supply side challenges. This has affected
deliveries of some critical long-lead time components and in
particular, those items that contain semiconductors are on extended
lead-times. Consequently, some of the orders that we had
anticipated completing in H1 2022 have now or are now expected to
ship in H2. Whilst this is frustrating, customers are understanding
of such delays in the current environment.
Enquiry levels remain encouraging, and we continue to tender for
contracts over a range of industry sectors and despite the
requirement for new capacity in the fibre optic furnace market
remaining modest there are pockets of activity for upgrades and
spares that we are addressing. New order intake, during the
year-to-date, has continued to be positive and an improving
opportunity pipeline in sectors other than fibre optics gives us
confidence that management's expectations for the RF Technologies
division will be achieved.
With the medium to longer-term trend for the RF Technologies
division improving, we have commenced recruitment to improve the
range of internal technical resources required to achieve our
growth targets whilst ensuring overhead expenditure remains
controlled.
Outlook
The RF Technologies Division has been progressively overcoming
the supply constraints that delayed customer deliveries during the
first half of the year and the Board now expects that shipments in
relation to all previously announced contracts will occur in H2
2022.
Biome Bioplastics' trading is seeing significantly increased
risks and uncertainties surrounding the timing and scale of revenue
opportunities as evidenced by the slower ramp of revenues from its
second US customer. Whilst the Board is confident that new products
to be launched in 2023 utilising Biome's Home Compostable materials
will meet market approval, given the economic outlook generally and
its impact on the Group's customers, the Board is taking a very
cautious approach and considers that further delays and a scaling
back of volumes are inevitable in the shorter term.
As a consequence of the challenging trading conditions described
above, the Board now believes that Group revenues for the years
ending 31 December 2023 and 2023 will be substantially below
current market expectations with a consequential substantial impact
on the Group's loss/profit before interest, taxation, depreciation,
amortisation and share option charges.
Despite trading conditions deteriorating significantly, we
believe we have sufficient working capital for the foreseeable
future.
John Standen
Chairman
(1) Loss before interest, taxation, depreciation and
amortisation is an alternative profit measure as detailed in Note
7.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the period ended 30 June
2022
Note 6 Months 6 Months Year
Ended Ended Ended
30 June 30 June 31 December
2022 2021 2021
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
-------------------------------- ----- ---------- ---------- -------------
Revenue 5 2,428 2,589 5,734
Cost of goods sold (1,562) (1,731) (3,794)
---------- ---------- -------------
Gross Profit 866 858 1,940
Other operating income 203 110 364
Administrative expenses (1,718) (1,739) (3,439)
---------- ---------- -------------
Loss from operations (649) (771) (1,135)
Finance and similar charges (18) (19) (34)
---------- ---------- -------------
Loss before taxation (667) (790) (1,169)
Taxation 30 90 29
Total comprehensive loss for
the period (637) (700) (1,140)
---------- ---------- -------------
Basic loss per share - pence (17)p (19)p (30)p
Diluted loss per share - pence (17)p (19)p (30)p
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2022
At At At
30 June 30 June 31 December
2022 2021 2021
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
--------------------------------- ---------- ---------- -------------
NON-CURRENT ASSETS
Other intangible assets 765 797 726
Property, plant and equipment 473 541 502
---------- ---------- -------------
1,238 1,338 1,228
CURRENT ASSETS
Inventories 1,552 1,205 920
Trade and other receivables 861 1,228 1,377
Taxation receivable 109 90 79
Cash and cash equivalents 652 1,390 996
---------- ---------- -------------
3,174 3,913 3,372
TOTAL ASSETS 4,412 5,251 4,600
---------- ---------- -------------
CURRENT LIABILITIES
Trade and other payables (1,761) (1,587) (1,298)
Lease liabilities (47) (43) (40)
---------- ---------- -------------
(1,808) (1,630) (1,338)
NON-CURRENT LIABILITIES
Lease liabilities (340) (381) (361)
---------- ---------- -------------
(340) (381) (361)
TOTAL LIABILITIES (2,148) (2,011) (1,699)
---------- ---------- -------------
NET ASSETS 2,264 3,240 2,901
---------- ---------- -------------
EQUITY
Share capital 189 189 189
Share premium 2,282 2,282 2,282
Capital redemption reserve 4 4 4
Share options reserve 487 647 487
Translation reserve (85) (85) (85)
Treasury shares reserve (55) (55) (55)
Retained earnings (558) 258 79
TOTAL EQUITY 2,264 3,240 2,901
---------- ---------- -------------
The interim statements were approved by the Board on 21
September 2022.
Signed on behalf of the Board of Directors
Paul R Mines Rob Smith
Chief Executive Officer Chief Financial Officer
CONSOLIDATED STATEMENT OF CASH FLOWS
For the period ended 30 June 2022
At At At
30 June 30 June 31 December
2022 2021 2021
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
----------------------------------------- ---------- ---------- -------------
Loss after taxation: (637) (700) (1,140)
Adjustments for: -
Taxation (30) (90) (29)
Finance charges 18 19 34
Loss from operations (649) (771) (1,135)
Adjustments for: -
Amortisation and impairment of
intangible assets 174 169 353
Depreciation of property, plant
and equipment 44 44 88
Share based payments - equity settled - 38 48
---------- ---------- -------------
Operating cash flows before movement
in working capital (431) (520) (646)
Increase in inventories (632) (459) (174)
Decrease in receivables 516 211 13
Increase in payables 463 538 230
----------
Cash utilised in operations (84) (230) (577)
Taxation received - 155 239
Interest paid (18) (19) (34)
---------- -------------
Net cashflow from operating activities (102) (94) (372)
---------- ---------- -------------
Investing activities
Investment in intangible assets (213) (145) (258)
Purchase of property, plant and
equipment (7) (10) (8)
Net cash used in investing activities (220) (155) (266)
---------- ---------- -------------
Financing activities
Proceeds from issue of share capital - 1 1
Repayment of obligations under
leasing activities (22) (40) (45)
Net cash from financing activities (22) (39) (44)
---------- ---------- -------------
Net decrease in cash and cash
equivalents (344) (288) (682)
Cash and cash equivalents at the
beginning of the period 996 1,678 1,678
Cash and cash equivalents at the
end of the period 652 1,390 996
---------- ---------- -------------
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the period ended 30 June 2022
1. CORPORATE INFORMATION
The financial information for the period ended 30 June 2022 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 2021
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 2022.
They have been prepared in accordance with UK-adopted international
accounting standards. 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 2021.
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 2021.
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 2022. As at 30 June 2022, the subsidiary undertakings were
Biome Bioplastics Limited, Biome Bioplastics Inc., Stanelco RF
Technologies Limited, Aquasol Limited and InGel Technologies
Limited.
4. GOING CONCERN
The Directors have reviewed forecasts for the period to December
2023. These have been prepared with appropriate regard for the
difficult current macroeconomic environment including the ongoing
impact of Covid-19 "lockdowns" in China affecting supply chains and
the markets and circumstances in which the Group operates. The
forecasts included assumptions on exchange rates, supplier lead
times and receipts from customers being broadly in line with agreed
terms. The directors believe the assumptions to be reasonable but
fundamental to the forecasts.
The Directors have considered the future 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.
On the basis of the above, the Directors are satisfied that the
Group has sufficient working capital to continue as a going concern
for at least one year from the date of approval of these Interim
Results.
5. SEGMENTAL INFORMATION
Revenue from external customers
For the period ended 30 June 2022
6 Months 6 Months Year
Ended Ended Ended
30 June 30 June 31 December
2022 2021 2021
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
----------------------------------- ---------- ---------- -------------
Biome Bioplastics Division 2,031 2,271 4,797
Stanelco RF Technologies Division 397 318 937
---------- ---------- -------------
Total Revenue 2,428 2,589 5,734
---------- ---------- -------------
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
GBP637,000 (H1 2021: loss of GBP700,000, FY 2021: loss of
GBP1,140,000) and a weighted average of 3,755,930 ordinary shares
in issue (H1 2021: 3,729,527, FY 2021: 3,742,655). 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.
For the period ended 30 June 2022
6 Months 6 Months Year
Ended Ended Ended
30 June 30 June 31 December
2022 2021 2021
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
----------------------------------- ---------- ---------- -------------
Biome Bioplastics Division 2,031 2,271 4,797
Stanelco RF Technologies Division 397 318 937
---------- ---------- -------------
Total Revenue 2,428 2,589 5,734
---------- ---------- -------------
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