REG - Biome Technologies - Interim Results
27/09/2023 07:00
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RNS Number : 7487N Biome Technologies PLC 27 September 2023
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.
27 September 2023
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 2023.
Highlights
· The Group generated revenues of £3.6m (2022 H1: £2.4m), an
increase of 47% on 2022 H1, and gross profit of £1.1m (2022 H1: £0.9m)
· The Bioplastics division's revenues for 2023 H1 were £3.1m, a 50%
increase on 2022 H1 (2022 H1: £2m)
· The Biome Bioplastics division was the principal revenue generator
for the Group and saw good demand from both new and existing customers,
particularly in North America
· Revenues for the RF Technologies division in 2023 H1 were £0.5m,
representing an increase of 30% compared to 2022 H1 (2022 H1: £0.4m) and the
division secured a significant new contract.
· Gross proceeds of £0.85m received from a convertible loan note
issue to support the working capital needs of the Group.
· Appointment of Martin Rushton-Turner as a new Non-Executive
Director of the Company in May 2023
Paul Mines, Chief Executive Officer said:
"I am delighted by the revenue growth achieved in the first half. I am
particularly encouraged by the diversification of our customer base and the
applications of use in both the Bioplastics and RF Technologies 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/Tony Quirke (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 and 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.
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 and other industrial markets.
www.biometechnologiesplc.com www.biomebioplastics.com and
www.thinkbioplastic.com www.stanelcorftechnologies.com
Chairman's Statement
Group revenues for 2023 H1 were £3.6m (2022 H1: £2.4m), an increase of
£1.2m or 47% on 2022 H1. This growth was driven predominantly by the
increased demand in the Bioplastics division.
As mentioned in our last trading update announced on 26 July 2023, the Group's
two divisions both made progress in the first half of 2023. For the Biome
Bioplastics Division ("Bioplastics"), strong growth was driven by a broader
set of customers in a variety of applications, particularly in North America.
For the Stanelco RF Technologies division ("RF Technologies"), revenues grew
slightly and as announced on 22 June 2023 a contractual agreement to proceed
was concluded on the first of several opportunities of scale in the division's
pipeline.
Gross profit for the Group was £1.1m (2022 H1: £0.9m) on the back of this
revenue growth. Other income, in the form of grant receipts in support of the
Group's work on novel bioplastics, was £0.2m (2022 H1: £0.2m). The overall
gross margin for the Group fell to 31% (2022 H1: 36%) reflecting the changing
product mix as the Bioplastics division grew rapidly in the period.
In the context of global inflationary pressures, the rise in activity and
foreign exchange rate movements contributed to a rise in administrative
expenses to £2.0m (2022 H1: £1.7m) of which exchange rate translation
represented a loss of £0.1m (2022 H1: £0.1m profit). The Group recorded a
loss before taxation for the six months to 30 June 2023 of £1.1m (2022 H1:
£0.7m loss). This includes a fair value movement on financial instruments of
£0.3m in line with IFRS 9 and financing charges for interest and costs
associated with the convertible loan notes issued in the period. The fair
value movement was and will be driven by movements in the Company's share
price from the date of inception to the balance sheet date for the embedded
derivative in the convertible loan notes. Increases in share price result in a
loss recorded on the statement of comprehensive income with reductions in
share price resulting in a profit. This is a non-cash item that will be
transferred to equity if the convertible loan notes are eventually converted
to shares.
The total comprehensive loss was £1.1m (2022 H1: £0.6m loss), which equates
to a basic and diluted loss per share of 28 pence (2022 H1: basic and diluted
loss per share of 17 pence).
In March and April 2023, following a review by the Board of potential funding
options, Biome was pleased to announce issues of convertible loan notes to
raise gross proceeds of £0.85m for the Company. These proceeds are being
used to support the commercial and technical resources required to deliver
growth and build sales margins within Bioplastics and to provide RF
Technologies with the cash resources to convert existing opportunities within
its sales pipeline.
The Group's cash position as at 30 June 2023 was £0.9m, reflecting the first
half's trading, working capital movements, £0.85m outstanding of the
convertible loan notes repayable in 2026 and no bank debt or drawdowns against
the Company's invoice discounting facility.
In May 2023, the Company was pleased to announce the appointment of Mr Martin
Rushton-Turner as a Non-Executive Director of the Company. Mr Rushton-Turner
is an important investor in both the ordinary shares of the Company and the
convertible loan notes and the Board is already benefitting from his
experience and insight.
Bioplastics division
Revenues for 2023 H1 were £3.1m, a 50% increase on 2022 H1 (2022 H1: £2m).
The revenue performance in the period remained underpinned by a continuance of
sales to existing customers for outer flexible film packaging and filtration
material for the North American coffee market and also a number of new
customers which are now purchasing Biome's materials on a regular basis. We
believe that this progress highlights the growing reputation of the
Bioplastics division for innovative materials and demonstrates how we hope it
will lead to market success, particularly in North America.
Our drive to deliver growth from the North American market was enhanced in
late 2022 by the relocation of a senior Biome employee, responsible for
business development, to Canada and the start-up of legal entities and
associated back-office services in both the USA and Canada. Work to build on
this foundation has continued in 2023, with an enhanced level of tradeshow and
customer activity. We expect to build further on this team with additional
resources in North America in due course.
In the winter of 2021/22, Biome launched materials designed to allow tree
shelters (plastic tubes around saplings) to be left on the forest floor after
use to biodegrade in a benign manner. In 2022, Biome announced the
commencement of large-scale, UK-wide field testing and initial commercial
sales with a commercial partner of biodegradable tree shelters using Biome's
proprietary bioplastics materials. In the last six months the product is
becoming established in some areas of the market and work to develop this
further continues.
Some of the growth of revenues in the first half is based on "home
compostable" plastic grades of polymers. Some of these grades are subject to
the protection of a pending patent application. 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 four years and we are now beginning to see commercial revenues with
several customers particularly in applications such as food packaging pouches.
The Bioplastics division continues to see a high level of interest in its
products in North America across a wider variety of applications than has been
seen traditionally. Management expects demand for the division's products in
2023 H2 to continue at similar rate to that experienced in 2023 Q2, with
further substantial growth linked to product launches, the timing of which
remains uncertain as referenced in previous trading statements.
RF Technologies division
Revenues for 2023 H1 were £0.5m, representing an increase of 30% compared to
2022 H1 (2022 H1: £0.4m).
On 22 June 2023, the division announced a significant new contract win with a
revenue value of £452,000 for the supply of a novel induction furnace system
to a global manufacturer of scientific glass products. As announced, the
specific revenue timing was dependent on the availability of key components.
Completion of the project deliverables is now expected in the 2024 financial
year with revenue and profit being recognised in that year in line with
IFRS-15. Several novel design concepts are being incorporated in the system
being developed with the new intellectual property being retained by the
division. It is anticipated that this technology will form the basis of future
system sales.
The division continues to be in discussions with several potential customers
regarding contracts that would have revenue and profit recognition potential
of significance for 2024. Management is pleased with the novel market sectors
in which the division is building a pipeline of potential new business and the
scale of some of these opportunities. We remain cautious on the precise timing
of converting these opportunities to orders and the associated revenue
recognition as much of this work requires considerable new collaborative
designs with customers.
With the medium to longer-term trend for the RF Technologies division
improving, we have commenced recruitment to improve the range of internal
technical and commercial resources required to achieve our growth targets,
whilst ensuring overhead expenditure remains controlled.
Outlook
We are pleased with the progress of the Bioplastics division in the first
half. The exceptional revenue growth of 50% over the first half of the
previous year reflects a significant broadening of both customers and
applications in the North American market. Investment in the local team has
already provided a higher level of market visibility for our products through
visits and tradeshows and enhanced customer service. Whilst we anticipate
revenue for 2023 H2 to continue at a similar rate to that experienced in 2023
Q2, we expect further growth in due course as this broader set of customers
undertake further product launches.
We are also pleased with progress being made in the RF Technologies division
to build a business with a broader business base beyond the traditional fibre
optic market. The diversifying contract win in the scientific glass sector,
announced in June, reflects the conclusion of just one of the discussions
underway to deploy a new and more efficient RF technology across a variety of
applications. We expect to make further announcements with impact on 2024
financials in due course.
Adverse exchange rates and the phasing of revenue from RF Technologies into
2024 will provide some pressure at the operating profit level and the Board's
outlook for the Group's trading performance in 2023 is broadly in-line with
current market expectations. The expected loss for 2023 has been adjusted to
reflect the required technical accounting treatment of the CLNs.
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 2023
Note 6 Months Ended 6 Months Ended Year Ended
30 June
30 June
31 December 2022
2023
2022
Unaudited Unaudited Audited
£'000 £'000 £'000
Revenue 5 3,569 2,428 6,188
Cost of goods sold (2,463) (1,562) (3,857)
Gross Profit 1,106 866 2,331
Other operating income 201 203 211
Administrative expenses (1,969) (1,718) (3,309)
Loss from operations (662) (649) (767)
Investment income 1 - -
Fair value movement on financial instruments 8 (333) - -
Finance and similar charges (105) (18) (35)
Loss before taxation (1,099) (667) (802)
Taxation 35 30 131
Total comprehensive loss for the period (1,064) (637) (671)
Basic and diluted loss per share - pence (28)p (17)p (18)p
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2023
Note At At At
30 June
30 June
31 December 2022
2023
2022
Unaudited Unaudited Audited
£'000 £'000 £'000
NON-CURRENT ASSETS
Other intangible assets 829 765 841
Property, plant and equipment 460 473 498
1,289 1,238 1,339
CURRENT ASSETS
Inventories 872 1,552 736
Trade and other receivables 950 861 605
Taxation receivable 176 109 141
Cash and cash equivalents 932 652 779
2,930 3,174 2,261
TOTAL ASSETS 4,219 4,412 3,600
CURRENT LIABILITIES
Trade and other payables (1,425) (1,761) (933)
Lease liabilities (61) (47) (55)
(1,486) (1,808) (988)
NON-CURRENT LIABILITIES
Financial instruments 8 (1,148) - -
Lease liabilities (325) (340) (354)
(1,473) (340) (354)
TOTAL LIABILITIES (2,959) (2,148) (1,342)
NET ASSETS 1,260 2,264 2,258
EQUITY
Share capital 189 189 189
Share premium 2,282 2,282 2,282
Capital redemption reserve 4 4 4
Share options reserve 108 487 102
Translation reserve (78) (85) (83)
Treasury shares reserve - (55) (55)
Retained earnings (1,245) (558) (181)
TOTAL EQUITY 1,260 2,264 2,258
The interim statements were approved by the Board on 26 September 2023 and
signed on behalf of the Board of Directors by: -
Paul R Mines Rob
Smith
Chief Executive Officer Chief Financial
Officer
CONSOLIDATED STATEMENT OF CASH FLOWS
For the period ended 30 June 2023
At At At
30 June
30 June
31 December
2023
2022
2022
Unaudited Unaudited Audited
£'000 £'000 £'000
Loss after taxation: (1,064) (637) (671)
Adjustments for: -
Taxation (35) (30) (131)
Fair value movement on financial instruments 333 - -
Finance charges 105 18 35
Loss from operations (661) (649) (767)
Adjustments for: -
Amortisation and impairment of intangible assets 144 174 250
Depreciation of property, plant and equipment 49 44 89
Share based payments - equity settled 6 - -
Operating cash flows before movement in working capital (462) (431) (428)
(Increase) / decrease in inventories (136) (632) 184
(Increase) / decrease in receivables (345) 516 762
Increase / (decrease) in payables 576 463 (339)
Cash utilised in operations (367) (84) 179
Taxation received - - 79
Interest paid (59) (18) (35)
Net cashflow from operating activities (426) (102) 223
Investing activities
Investment in intangible assets (131) (213) (365)
Purchase of property, plant and equipment (11) (7) (27)
Net cash used in investing activities (142) (220) (392)
Financing activities
Proceeds from issue of treasury shares 1 - -
Proceeds from issue of convertible loan notes 850 - -
Costs of issue of convertible loan notes (112) - -
Repayment of obligations under leasing activities (23) (22) (50)
Net cash from financing activities 716 (22) (50)
Net increase / (decrease) in cash and cash equivalents 148 (344) (219)
Cash and cash equivalents at the beginning of the period 779 996 996
Exchange differences on cash and cash equivalents 5 - 2
Cash and cash equivalents at the end of the period 932 652 779
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the period ended 30 June 2023
1. CORPORATE INFORMATION
The financial information for the period ended 30 June 2023 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 2022 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 2023. 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 2022.
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 2022. As disclosed in note 8, convertible loan notes
(CLNs) have been issued during the period. These CLNs incorporate an embedded
derivative recognised at fair value through profit and loss and a residual
debt component measured at amortised cost in accordance with IFRS 9.
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 2023. As at
30 June 2023, the subsidiary undertakings were Biome Bioplastics Limited,
Biome Bioplastics Inc. (USA), Biome Bioplastics Inc. (Canada), Stanelco RF
Technologies Limited, Aquasol Limited and InGel Technologies Limited.
4. GOING CONCERN
The Directors have reviewed forecasts for the period to December 2024. These
have been prepared with appropriate regard for the current macroeconomic
environment. 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 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 2023
6 Months Ended 6 Months Ended Year
30 June
30 June
Ended
2023
2022
31 December 2022
Unaudited Unaudited Audited
£'000 £'000 £'000
Bioplastics Division 3,053 2,031 4,393
RF Technologies Division 516 397 1,795
Total Revenue 3,569 2,428 6,188
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 £1,064,000 (H1 2022:
loss of £637,000, FY 2022: loss of £671,000) and a weighted average of
3,760,497 ordinary shares in issue (H1 2022: 3,755,930, FY 2022: 3,755,930).
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 2023
6 Months Ended 6 Months Ended Year
30 June
30 June
Ended
2023
2022
31 December 2022
£'000s £'000s £'000s
Loss from operations (662) (649) (767)
Depreciation 49 44 89
Amortisation 144 174 250
Share based payments 6 - -
Loss Before Interest, Taxation, Depreciation and Amortisation (463) (431) (428)
8. CONVERTIBLE LOAN NOTES / FINANCIAL INSTRUMENTS
The convertible loan notes issued by the Company in March and April 2023 are
recognised as financial instruments in the consolidated statement of financial
position and are calculated as:
Debt component Embedded derivative Total
£'000 £'000 £'000
Face value of convertible loan notes 477 373 850
Less issue costs (63) - (63)
Value at recognition 414 373 787
Fair value adjustment - 333 333
Interest expense 35 - 35
Interest paid (7) - (7)
Value at 30 June 2023 442 706 1,148
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