REG - Biome Technologies - Interim Results
20/09/2024 07:00
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RNS Number : 9451E Biome Technologies PLC 20 September 2024
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.
20 September 2024
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 2024 (the "2024 H1").
Highlights
· The Group generated revenues of £2.3m (2023 H1: £3.6m) and gross
profit of £0.8m (2023 H1: £1.1m).
· The Bioplastics division's revenues for 2024 H1 were £2.0m, a 34%
decrease on 2023 H1 (2023 H1: £3.1m).
· The RF Technologies division announced contract wins amounting to
£1.7m, in line with the Company's expectations, with the majority of revenue
expected in 2024 H2.
· Gross proceeds of £0.40m were received in March 2024, following a
Convertible Loan Note fundraise.
· Subsequent to the period end, gross proceeds of £1.1m were received
in September 2024 following the fundraise subsequent to the conversion of the
Convertible Loan Notes.
Paul Mines, Chief Executive Officer said:
"The challenges encountered by the Bioplastics business in the first half are
progressing towards resolution, albeit some hurdles remain to achieve the
revenue run-rate we expect in the near term.
"We have successfully completed the first major RF Technologies division
project of the year and achieved customer acceptance. We remain on track to
deliver three further projects by the end of the year.
"I was pleased by the response to our recent fundraising, particularly with
the retail offer being oversubscribed, and I would like to thank our investors
for their continuing support."
For further information please contact:
Biome Technologies plc
Paul Mines, Chief Executive Officer
Donna Simpson-Strange, Company Secretary
Tel: +44 (0) 23 8086 7100
info@biometechnologiesplc.co.uk (mailto:info@biometechnologiesplc.co.uk)
Allenby Capital
David Hart/Alex Brearley/Lauren Wright (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 (http://www.biometechnologiesplc.com)
www.biomebioplastics.com (http://www.biomebioplastics.com) and
www.thinkbioplastic.com (http://www.thinkbioplastic.com)
www.stanelcorftechnologies.com (http://www.stanelcorftechnologies.com)
Chairman's Statement
Group revenues for 2024 H1 were £2.3 million (2023 H1: £3.6 million), a
decrease of £1.3 million compared to 2023 H1. This lower level of revenue in
2024 H1 was caused primarily by continued production and regulatory
difficulties at two of the Bioplastics division's end-customers and the
second-half phasing of revenue from the four significant RF division projects,
that were undergoing the design phase and some elements of assembly in H1.
At 30 June 2024, the Group had a cash balance of £0.6 million (30 June 2023:
£0.9 million) and Convertible Loan Notes ("CLNs") outstanding of an original
principal amount of £1.25 million and no bank debt.
In recent weeks, an equity fundraise and conversion of the CLNs was announced
and then completed following the General Meeting held on 4 September 2024.
As at 19 September 2024, the Group had an unaudited cash balance of £1.0m,
an unsecured loan of £0.06m and no bank debt.
Bioplastics Division
The division's revenues for 2024 H1 were £2.0 million (2023 H1: £3.1
million). This was primarily due to production and regulatory difficulties at
two of the division's end customers which subdued revenues in the first half
compared to our expectations. Increased revenues are expected from these
end-customers in 2024 H2 and beyond as various technical validations are
finalised.
For one of these end customers operating in the coffee pod market, the
solution to their production difficulties has been the development of a
slightly revised finished product, which incorporates greater amounts of
Biome's materials. This product has been tested extensively to validate its
utility and is now being scaled up in production whilst the final stages of
third party certification are completed. We have recently been notified by
the customer that the certifying authority has required additional laboratory
testing on the revised product. Whilst similar testing has been undertaken
previously, the certifying authority has, at short notice, required this
testing to be undertaken at a different laboratory. Whilst expected to be
confirmatory, and run in line with our delivery schedules, this additional
testing is likely to introduce some delay in the customer's sales campaigns
and slow down revenue uptake in 2024 Q4.
We are continuing the development of home compostable materials (moving away
from industrial compostable) throughout our range of product applications. The
success of the development of these materials has generally depended upon the
thickness of the material required for the application. For example, in the
film area, where materials are thinner, success has been achieved earlier than
within thicker materials such as mesh.
The division operates in three broader application areas that are described
below:
Mesh encompasses fibres for wovens and non-wovens to produce a filtration
fabric and their underlying bioplastic polymer compounds. Revenues were
subdued in this area in 2024 H1 as one end-customer (a leading player in the
North American coffee market) encountered production difficulties. Work with
this end-customer throughout 2024 Q2 has established the root-cause and we
expect a return to the usage of Biome's mesh later in 2024 H2 accompanied by
additional use of Biome's home compostable rigid materials. It is anticipated
that this will lead to further growth in 2025.
During 2024 H1, broader demand for Biome's mesh products was as expected and
work with six individual development prospects is underway as the Company
seeks to exploit its technical advantage. These end uses for these prospects
range across food and beverage to horticulture. Most of these prospects are
being co-developed in anticipation of the launch of the division's home
compostable range, which is expected in 2025, but is not expected to provide
significant revenues in that year.
Home compostable fibres and non-wovens remain the division's primary
development focus and in recent months we have seen several important
milestones reached towards the achievement of these goals.
Rigids encompasses bioplastic polymer compounds for producing rigid parts,
often using processes of injection moulding or extrusion. In this application
area, the switch to home compostable materials has started and the majority of
customer volumes are expected to have switched by the end of 2025. Looking
forward, of note is the anticipated increase in revenues in 2025 from the
end-customer in the North American coffee market highlighted earlier.
In 2024 H1, revenues in tree guard applications were below expectations as
Biome's key customer was delayed in completing its production validation
process. The Company expects modest growth from this area as the product is
expected to be promoted more vigorously in the 2024/2025 winter planting
season.
Film describes end-use applications in which Biome's bioplastics granules are
converted into filmic products primarily for the food packaging sector. The
conversion, in Biome's customer base, to home compostable products in this
application area started in 2023 and this product type is expected to form the
majority of products sold by end 2024. The expected ramp-up of demand with a
customer that Biome has been working with for two years was delayed in 2024 H1
by regulatory matters in this end-customer's markets. The resolution has been
progressed and launch is now expected in 2024 H2. Biome continues to diversify
its customer set in the filmic area and a number of new customers are emerging
with meaningful revenues in 2024, with further volume growth expected for
2025.
RF Technologies Division
The RF division entered the year having secured a major contract in 2023 for
delivery in 2024 and secured three further large contract wins in 2024 H1,
which are expected to result in significant revenue being recognised in 2024.
These contract wins are in line with our expectations. The division's
background spares, service and small equipment revenues have continued as
expected in 2024 H1.
The first of these major contracts, for a scientific glass application area,
is nearing completion and the equipment completed customer acceptance testing
at the RF division's facilities in late August and has since been shipped to
the customer. Installation at the customer's premises is expected in 2024
Q4. The second scientific glass contract is also expected to be completed in
2024 Q4.
The two significant contracts for the medical markets are now in their design
phase, building on previous modular units that have been deployed before and
completion is expected in 2024 H2.
Looking ahead to the pipeline of prospects, the RF Technologies division is in
discussions regarding several large contracts in growth sectors which are
expected to complete in 2025 and which the Company expects will be supported
by similar levels of spares, service and small equipment activity.
Board
Simon Herrick's resignation from the Board was announced on 10 July 2024.
Whilst a replacement independent non-executive director is sought, I have
assumed the additional responsibilities of Chairman of both the Company's
audit and remuneration committees.
Group Outlook
The Board anticipates improved operational performance during the remainder of
this year.
The Bioplastics division continues to work to resolve the end-customer
difficulties encountered in 2024 H1. Whilst good progress is being made, the
unexpected additional testing required for certification described above may
cause a delay to the anticipated ramp-up for one of these customers. The Board
has therefore made a small revision to its expectations of revenue and
contribution from the Bioplastics division in 2024 H2.
The RF division will be focusing on delivering the contracts won late last
year and in 2024 H1, widening its customer and technology base whilst also
looking to secure further business for 2025.
There remains a strong emphasis in both divisions on bringing novel
technologies through to commercialisation and widening the customer base to
reduce the impact of the type of disruptions we have seen in 2024. In
particular, the Board believes our gradual deployment of home compostable
materials throughout our range of bioplastic product areas will increasingly
demonstrate the benefits of our products to our customers and help drive
future growth.
The second half of 2024 is expected to show an improvement on that revenue
performance and the Board expects to see a continuation of that growth trend
in 2025.
John Standen
Non-Executive Chairman
CONSOLIDATED STATEMENT OF INCOME
For the period ended 30 June 2024
Six months ended 30 June 2024 Six months ended 30 June 2023 Year ended 31 December 2023
Unaudited Unaudited Audited
Note £000 £000 £000
Revenue 5 2,342 3,569 6,976
Cost of goods sold (1,503) (2,463) (4,713)
Gross profit 839 1,106 2,263
Other operating income 141 201 431
Administrative expenses (2,142) (1,969) (3,928)
Loss from operations (1,162) (662) (1,234)
Investment income - 1 2
Fair value movement on financial instruments
7 384 (333) (150)
Finance and similar charges (51) (105) (197)
Loss before taxation (829) (1,099) (1,579)
Taxation 25 35 20
Loss after tax for the period (804) (1,064) (1,559)
Basic and diluted loss per share - pence 8 (21)p (28)p (41)p
CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
For the period ended 30 June 2024
Six months ended 30 June 2024 Six months ended 30 June 2023 Year ended 31 December 2023
Unaudited Unaudited Audited
Note £000 £000 £000
Loss for the year (804) (1,064) (1,559)
Other comprehensive income
Items that are or may be subsequently reclassified to profit and loss:
Currency translation movement arising on consolidation
1 5 15
Total comprehensive loss for the period (803) (1,059) (1,544)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2024
31 December 2023
30 June 2024 30 June 2023
Unaudited Unaudited Audited
Note £000 £000 £000
NON-CURRENT ASSETS
Other intangible assets 816 829 788
Property, plant and equipment 385 460 418
1,201 1,289 1,206
CURRENT ASSETS
Inventories 824 872 631
Trade and other receivables 570 950 1,324
Taxation receivable 25 176 75
Cash and cash equivalents 626 932 599
2,045 2,930 2,629
TOTAL ASSETS 3,246 4,219 3,835
CURRENT LIABILITIES
Trade and other payables 1,777 1,425 1,701
Lease liabilities 60 61 60
1,837 1,486 1,761
NON-CURRENT LIABILITIES
Convertible loan notes 7 785 442 504
Derivative financial instruments 7 346 706 523
Lease liabilities 263 325 295
1,394 1,473 1,322
TOTAL LIABILITIES 3,231 2,959 3,083
TOTAL NET ASSETS 15 1,260 752
EQUITY
Share capital 189 189 189
Share premium 2,283 2,282 2,283
Capital redemption reserve 4 4 4
Share options reserve 204 108 139
Translation reserve 18 (78) (68)
Treasury shares reserve - - -
Retained losses (2,683) (1,245) (1,795)
TOTAL EQUITY 15 1,260 752
The interim statements were approved by the Board on 20 September 2024 and
signed on behalf of the Board of Directors by:
Paul R Mines
Chief Executive Officer
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the period ended 30 June 2024
Share capital Share premium Capital redemption reserve Share options reserve Translation reserve Treasury shares Retained earnings Total equity
£000 £000 £000 £000 £000 £000 £000 £000
Balance at 1 January 2024 189 2,283 4 139 (68) - (1,795) 752
Share options issued in share based payments - - - 66 - - - 66
Lapsed share options - - - (1) - - 1 -
Transactions with owners
Loss for period - - - - - - (804) (804)
Currency translation movement arising on consolidation*
- - - - 86 - (85) 1
Total comprehensive loss for the year
- - - - 86 - (889) (803)
Balance at 30 June 2024 189 2,283 4 204 18 - (2,683) 15
Share capital Share premium Capital redemption reserve Share options reserve Translation reserve Treasury shares Retained earnings Total equity
£000 £000 £000 £000 £000 £000 £000 £000
Balance at 1 January 2023 189 2,282 4 102 (83) (55) (181) 2,258
Share options issued in share based payments - - - 6 - - - 6
Sale of treasury shares - - - - - 55 - 55
Transactions with owners
Loss for period - - - - - - (1,064) (1,064)
Currency translation movement arising on consolidation
- - - - 5 - - 5
Total comprehensive loss for the year
- - - - 5 - (1,064) (1,059)
Balance at 30 June 2023 189 2,282 4 108 (78) - (1,245) 1,260
Share capital Share premium Capital redemption reserve Share options reserve Translation reserve Treasury shares Retained earnings Total equity
£000 £000 £000 £000 £000 £000 £000 £000
Balance at 1 January 2023 189 2,282 4 102 (83) (55) (181) 2,258
Share options issued in share based payments
- - - 38 - - - 38
Exercise of share options - - - (1) - - - (1)
Issue of share capital - 1 - - - - - 1
Sale of treasury shares - - - - - 55 (55) -
Transactions with owners
Loss for period - - - - - - (1,559) (1,559)
Currency translation movement arising on consolidation
- - - - 15 - - 15
Total comprehensive loss for the year
- - - - 15 - (1,559) (1,544)
Balance at 31 December 2023 189 2,283 4 139 (68) - (1,795) 752
* Following an in-year review, a historic element (£85k) of
the translation reserve has been transferred to the retained earnings reserve.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the period ended 30 June 2024
Six months ended 30 June 2024 Six months ended 30 June 2023 Year ended 31 December 2023
Unaudited Unaudited Audited
Note £000 £000 £000
Loss after taxation (804) (1,064) (1,559)
Adjustments for:
Taxation (25) (35) (20)
Fair value movement on financial instruments (384) 333 150
Finance charges 136 105 197
Investment income - - (2)
Loss from operations (1,077) (661) (1,234)
Adjustments for:
Amortisation and impairment of intangible assets 140 144 345
Depreciation of property, plant and equipment 45 49 97
Share based payments - equity settled 66 6 38
Net foreign exchange differences (3) - -
Operating cash flows before movement in working capital
(829) (462) (754)
(Increase)/decrease in inventories (191) (136) 105
Decrease/(increase) in receivables 755 (345) (774)
Increase in payables 85 576 768
Cash utilised in operations (180) (367) (655)
Taxation received 75 - 140
Interest paid (8) (59) (59)
Net cash flow from operating activities (113) (426) (574)
Investing activities
Interest received - - 2
Investment in intangible assets (166) (131) (292)
Purchase of property, plant and equipment (13) (11) (10)
Net cash used in investing activities (179) (142) (300)
Financing activities
Proceeds from the issue of treasury shares - 1 1
Proceeds from the issue of convertible loan notes 400 850 850
Costs of issue of convertible loan notes (27) (112) (111)
Repayment of obligations under leasing activities (46) (23) (61)
Net cash flow from financing activities 327 716 679
Net increase/(decrease) in cash and cash equivalents 35 148 (195)
Cash and cash equivalents at the beginning of the period
599 779 779
Exchange differences on cash and cash equivalents (8) 5 15
Cash and cash equivalents at the end of the period 626 932 599
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the period ended 30 June 2024
1. CORPORATE INFORMATION
The financial information for the period ended 30 June 2024 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 2023 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 2024. 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 2023.
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 2023. As disclosed in note 7, 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 2024. As at
30 June 2024, 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
Following completion of the fundraising in early September 2024 which raised a
total of £1.1 million before expenses, the Company had unaudited cash of
£1.0 million as at 19 September 2024 and outstanding unsecured debt of £63k.
The Directors have reviewed forecasts for the period to December 2025. 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 resources 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 2024
Six months ended 30 June 2024 Six months ended 30 June 2023 Year ended 31 December 2023
Unaudited Unaudited Audited
£000 £000 £000
Bioplastics division 2,022 3,053 6,014
RF Technologies division 320 516 962
Total revenue 2,342 3,569 6,976
6. 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 2024.
Six months ended 30 June 2024 Six months ended 30 June 2023 Year ended 31 December 2023
Unaudited Unaudited Audited
£000 £000 £000
Loss from operations (1,162) (662) (1,234)
Depreciation 45 49 345
Amortisation 140 144 97
Share-based payments 66 6 38
Loss before interest, taxation, depreciation and amortisation
(911) (463) (754)
7. CONVERTIBLE LOAN NOTES / FINANCIAL INSTRUMENTS
The convertible loan notes issued by the Company in the prior year in March
and April 2023 and in the current year in March 2024 are recognised as
financial instruments in the consolidated statement of financial position and
are calculated as:
Debt component Embedded derivative Total
£000 £000 £000
Value at 1 January 2024 504 523 1,027
Face value of convertible loan notes issued 193 207 400
Less issue costs (13) - (13)
Fair value adjustment - (384) (384)
Interest expense 109 - 109
Interest paid (8) - (8)
Value at 30 June 2024 785 346 1,131
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
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 - 150 150
Interest expense 112 - 112
Interest paid (22) - (22)
Value at 31 December 2023 504 523 1,027
8. 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 £804,000 (2023 H1: loss
of £1,064,000, FY 2023: loss of £1,559,000) and a weighted average of
3,782,596 ordinary shares in issue (2023 H1: 3,760,497, FY 2023: 3,771,720).
The calculation uses the same weighted average number of ordinary shares under
the basic and diluted basis in the current and comparative periods due to a
loss being made.
9. POST BALANCE SHEET EVENTS
On 21 August 2024, the Company issued 200,000 new ordinary shares (the first
subscription) representing 5.3% of the issued share capital at a price of 5p
per ordinary share. These shares were acquired by Martin Rushton-Turner, a
non-executive director of the Company and convertible loan note holder.
Immediately following the first subscription on 21 August 2024, holders of the
convertible loan notes exercised their rights to convert their loan notes into
equity at a price of 5p per ordinary share. A further 25,573,218 new
ordinary shares were issued, increasing the total issued number of ordinary
shares to 29,555,814. A portion of the convertible loan notes was converted
into an unsecured loan of £62,750.
A further 18,800,000 new ordinary shares were issued on 6 September 2024 (the
second subscription) and 3,200,000 new ordinary shares were issued on the same
day as part of a retail offer to existing shareholders. The issue price for
both the second subscription and the retail offer was 5p per ordinary share.
The total number of ordinary shares in issue as at 20 September 2024 is
51,555,814.
In August 2024, the Company's RF Technologies division successfully delivered
a major project to a customer in North America.
10. PUBLICATION OF NON-STATUTORY ACCOUNTS
Copies of the interim statement may be obtained from the Company Secretary,
Biome Technologies Plc, Starpol Technology Centre North Road, Marchwood
Industrial Park, Southampton, Hampshire, England, SO40 4BL, and can be
accessed from the Company's website at https://biometechnologiesplc.com
(https://biometechnologiesplc.com) .
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