TIDMBIOM
RNS Number : 5306U
Biome Technologies PLC
30 July 2020
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 ("MAR")
30 July 2020
Biome Technologies plc
("Biome", "the Company" or "the Group")
Trading Update
Biome Technologies plc, a leading bioplastics and radio
frequency technology business, today publishes a trading update for
the six months ended 30 June 2020. The Company's unaudited interim
results are expected to be announced on 24 September 2020.
Total Group revenues for the first half of the year, including
government grant income, were GBP2.6m (H1 2019: GBP3.6m), in line
with the Board's expectations.
As anticipated, the Bioplastics division performed well despite
the upheaval caused by Covid-19 with a 53% increase in revenues
over the same period in the prior year. The revenues of the
Stanelco RF division, however, were compromised by both
over-capacity in the fibre optic market and the slow-down in
industrial activity caused by Covid-19, which remains ongoing.
The Group's cash position as at 30 June 2020 was GBP1.1m (31
March 2020: GBP1.8m), reflecting Group trading performance and an
expected increase in the working capital requirement of the
Bioplastics division to support the ongoing growth in that
business. The Group has no debt.
The Group continues its manufacturing and development operations
whilst ensuring the safety of staff and in conformance with
Government advice. The Group has continued to make use of the UK
Government "furlough scheme" and has curtailed discretionary
operational and capital expenditure.
Bioplastics Division
Revenues in the Bioplastics division continued to grow during H1
2020, reaching GBP2.2m for the period including government grant
income of GBP0.1m (H1 2019: GBP1.4m including government grant
income of GBP0.2m). Revenue in the second quarter was GBP1.2m,
slightly above the first quarter and representing a new record for
the division, despite the disruption caused by the pandemic.
The strong performance in the period was underpinned by
increased sales of outer packaging for the USA coffee market and by
growing revenues for rigid ring materials for the coffee-pod
market. Despite the lockdown and supply chain constraints in both
Europe and the USA, the Bioplastics division's work flows proved
resilient and production output met customer requirements
throughout the first half.
We are working with an expanding list of potential new customers
in the USA and developmental work in that context continues with
some vigour. The business is well positioned to exploit further
opportunities in this growing market.
The division's medium-term research activities in Industrial
Biotechnology continue, which include the development of a new
range of performance polymers with properties which are expected to
improve the existing generation of products. This work, taking
place at the universities of Nottingham and York, is supported by
government grants. Whilst university closures have slowed this
work, post period end, the division has received an Innovate UK
Continuity Grant of GBP63,000 to support the recovery of time lost
on this work.
Stanelco RF Technologies Division
Revenues for the first half of 2020 in the Stanelco RF division
were GBP0.4m (H1 2019: GBP2.2m).
A substantial proportion of the Stanelco RF division's revenues
are normally derived from the production and maintenance of
furnaces for the manufacture of fibre optic cable. Overcapacity in
the fibre optic cable market, apparent from late 2018, has been
exacerbated by the pandemic as telecommunication companies have
suffered restrictions on cable deployment activity and
international trade disputes have slowed the deployment of 5G.
These factors have led to temporary shut-downs of a number of
manufacturing facilities at Stanelco RF's customers, with a
consequential reduction in the requirement for Stanelco RF to
provide equipment, spares and service support. The expectation is
that in the long term, the fibre optic market will benefit from the
pandemic through the enhanced pace of global digitisation required
to meet the demands of, for example, increased home working and the
5G roll-out. However, in the short term, demand is likely to remain
weak.
The division also provides induction heating and welding
equipment to various end markets in the UK and continental Europe.
Activity in these markets in the second quarter was very weak, with
many facilities closed and customers deferring the purchase of
capital goods. The Company is pleased that in the last few weeks,
the enquiry level has increased and there have been some small
contract wins albeit overall demand levels remains subdued.
Outlook
The Board has sought to provide investors with as clear a view
as possible on its expectations for the Company during this
exceptional year. During the first half of 2020, the Group's two
divisions performed in line with the expectations communicated and
considered appropriate by the Board in April 2020, during the early
stages of the Covid-19 pandemic.
The Bioplastics division now has a range of products with a more
predictable and improving growth profile and is selling in the USA
predominantly, into a buoyant home-delivered coffee sector. Its
orderbook now extends further forward than the division has ever
experienced before, and the Board is therefore confident on the
outlook for the Bioplastics division for the remainder of the
current financial year.
Covid-19 has had a much greater impact on the Stanelco RF
division. The fibre optic cable market remains oversupplied and the
current pace of recovery in demand in the industrial goods sector
now appears slower and more uncertain than was anticipated in April
2020. Whilst refilling of the division's orderbook has begun in a
modest manner, significant further momentum would be required in
the second half of the year to meet the expectations previously set
by the Board. As a result, the Board has concluded that it is
necessary to revise downwards the revenue expectations for the
Stanelco RF division for the second half of the year.
- Ends -
For further information please contact: Biome
Technologies plc
Paul Mines, Chief Executive Officer
David Hughes, Group Finance Director
www.biometechnologiesplc.com Tel: +44 (0) 2380 867
100
Allenby Capital
David Hart/Alex Brearley (Nominated Adviser)
Kelly Gardiner (Broker)
www.allenbycapital.com Tel: +44 (0) 20 3328
5656
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 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
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END
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