REG - Biome Technologies - Trading Update

Biome TechnologiesAnnouncement

17/11/2021 07:05

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RNS Number : 6050S  Biome Technologies PLC  17 November 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.

 

17 November 2021

 

Biome Technologies plc

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

Trading Update

 

Biome Technologies plc, a leading bioplastics and radio frequency technology
business, provides an unaudited trading update for the nine months ended 30
September 2021.

In the Interim Statement of 15 September 2021, we reported that, heading into
the second half of the year, the order intake for the Bioplastics Division had
been good and we expected to see sales growth accelerate, particularly in the
final quarter of 2021. This assumed that the previously reported engineering
limitations at our second US customer for filtration mesh would be removed,
allowing a ramp up of their additional manufacturing lines.

These engineering limitations have been resolved and a quarter of the
customer's installed capacity has been equipped to run Biome's products, with
high efficiency production being achieved. However, Biome now understands that
the expected acceleration of further offtake will not occur until next year as
the customer manages conflicting production priorities.

In the Interim Statement we also reported that logistics difficulties (which
included port congestion and global sea container freight and road transport
constraints), as experienced by many industries, were hampering the Group's
normal delivery patterns to fulfil existing customers' contracts. These
ongoing logistics difficulties have also now led to some customer delays in
the implementation of new projects as they manage their own supply chain
problems.

Due to these factors, and the resulting revenue slippage into the 2022
financial year, despite not losing any orders, nor new projects, the Directors
now believe revenues in the final quarter of the year will be lower than they
previously envisaged and that therefore Group revenues for the year ending 31
December 2021 will be significantly below current market expectations.
However, due to an anticipated improved mix of sales, higher Other Operating
Income (specifically Grant Income) and lower overhead expenditure, the impact
on Group profitability will be minor, with the Director's expectation now
being that the EBITDA loss for the year ending 31 December 2021 will be only
slightly greater than current market expectations.

Whilst the issues highlighted above have stretched the Group's working capital
resources in 2021, the Directors believe that actions underway will improve
the efficiency of Biome's working capital cycle over time in a continuing
process to release cash. The Directors believe this is the optimum manner to
reach a cash positive position from trading, whilst securing growth and
building the Biome business successfully.

 

Bioplastics Division

Revenues in the Bioplastics division in Q3 at £0.8m were well behind the
prior year comparative (Q3 2020: £1.6m), as order deliveries slipped to Q4.
The division's revenues in the first nine months of the financial year stood
at £3.1m, compared to the equivalent period last year (2020: £3.8m).

As highlighted above, engineering work at our second US end-customer for
filtration mesh is complete and we expect further scale-up of offtake in due
course. Development work with a new third large customer in North America for
filtration mesh and other materials is proceeding satisfactorily. Commercial
scale trials continue with several large-scale North American customers for
packaging films. Our new business pipeline remains strong.

In Q3, the large-scale UK-wide field testing and initial commercial sales of
biodegradable tree shelters using Biome's proprietary bioplastics materials
began. Extended field testing of approximately 40,000 shelters at more than 40
sites is being carried out in close collaboration with Suregreen, a leading UK
manufacturer and supplier of products for the forestry, fencing and
landscaping markets. Significant revenue from this project is expected to
commence in 2022.

 

Stanelco RF Technologies Division

Revenues in the RF Technologies division in Q3 were £0.3m (Q3 2020: £0.2m),
resulting in revenues in the first nine months of the financial year of
£0.6m, in line with the same period in the prior year (2020: £0.6m).

This modest increase in revenues in Q3 reflects both improvement in demand in
the UK industrial sector and the division's continued efforts to increase its
geographic footprint and range of applications. The business has continued to
win smaller projects in the UK induction heating and welding market.

Encouragingly, the division recently signed a contract worth £247,000 with a
UK customer to deliver two fibre optic furnaces in the first half of 2022.
This is the first new capacity order received since 2018 and, viewed in the
context of increasing orders for spares and requests for quotations from other
clients, represents an encouraging development in this market.

 

Group Performance

Total Group revenues in Q3 were £1.1m (2020: £1.8m) taking Group revenues
for the nine months to 30 September 2020 to £3.6m (2020: £4.3m).

The Group's cash position as at 30 September 2021 was £1.0m (30 June 2021:
£1.4m) and the Group continued to have no external bank borrowings.

 

Group Outlook

In the short term, there are more challenges than we expected when we last
reported to shareholders in September and we now believe that revenues from
certain customers of the Bioplastics division will be delayed into the first
half of 2022.

Despite the difficulties described above, the market for the Group's products
remains positive. In Bioplastics, new business, materials and opportunities
continue to increase our reputation and revenue potential. In RF, there are
early but positive signs that the market trough is behind us, and that new
business generated in the division will be more broadly based than in the
past.

 

-Ends-

 

For further information please contact: Biome Technologies plc

Paul Mines, Chief Executive Officer

Donna Simpson-Strange, Company Secretary

info@biometechnologiesplc.co.uk (mailto:info@biometechnologiesplc.co.uk)

Tel: +44 (0) 2380 867 100

www.biometechnologiesplc.com
(file:///C:/Users/paul/Dropbox/Biome/www.biometechnologiesplc.com)

Allenby Capital

David Hart/Alex Brearley (Nominated Adviser)

Kelly Gardiner (Sales and Corporate Broking)

Tel: +44 (0) 20 3328 5656

www.allenbycapital.com (http://www.allenbycapital.com)

 

About Biome

Biome Technologies plc is an AIM listed, growth-orientated, commercially
driven technology group. Our strategy is founded on building market-leading
positions based on patented technology and serving international customers in
valuable market sectors. We have chosen to do this by developing products in
application areas where the value-added pricing can be justified and are not
reliant on government legislation. These products are driven by customer
requirements and are compatible with existing manufacturing processes. They
are market rather than technology-led.

The Group comprises two divisions, Biome Bioplastics Limited 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 (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)

 

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