Biome reports bumper quarter for bioplastics division

The AIM-traded firm said that represented the best quarter of 2019 to date, and was a 50% increase on the prior year.

It said the division's revenues in the first nine months of the financial year stood at £2.3m, up from £1.5m year-on-year and 21% higher than the full year revenues for 2018 of £1.9m.

“Revenues in the third quarter reflected strong underlying demand for products that have been commercialised for some time - outer packaging and non-woven filter mesh for the US coffee pod market - coupled with continuing revenues in materials for both cutlery and a single serve nutrition pod that are in the early stages of their market deployment,” the board said in its statement.

“The bioplastics team continues to work on a strong product development pipeline of opportunities with a variety of existing and new customers.

“Encouragingly, the final testing for a heat stable and compostable material for coffee pod rings has now been completed and commercial revenues are expected to commence in the fourth quarter.”

The company said the division's medium-term industrial biotechnology research was continuing, with two of its government grant-backed projects having been completed at the end of the quarter, which delivered a number of “important technical results” and “initial techno-economic assessments” to guide future work.

Key focuses in that area continued to be the development and testing of several novel bio-based and biodegradable polymers, and their supporting bio-based monomers.

In the ‘Stanelco’ radio frequency (RF) technologies division, revenues in the third quarter totalled £0.6m, down from £2.0m year-on-year, which resulted in revenues in the first nine months of the financial year of £2.8m, down from £5.5m.

The board said the operation was returning to a “more normalised turnover level” from the previously-reported exceptionally high levels of 2018.

It said it was still expecting full-year revenues for the division to be in line with those achieved in 2017, with the final quarter underpinned by a multiple furnace order for delivery in that quarter, as it had previously reported.

Total group revenues in the third quarter were £1.5m, down from £2.6m year-on-year, taking group revenues for the nine months to 30 September to £5.1m, falling from £7.0m.

The group said its cash position as at 30 September was £0.6m, compared to £1.7m at the end of June.

“In the third quarter, the principal utilisers of cash were the RF division, as it was building the multiple furnaces for delivery in Q4, and the bioplastics division, as it increased its working capital utilisation in line with its anticipated trading performance going forward,” the board said.

“The group year end cash position is anticipated to be in line with current market expectations.”

Biome had announced in September that it had raised £1.3m, or £1.2m net of costs, to support the increased working capital requirements of the bioplastics division's growth.

Shareholder approval was obtained on 30 September and the funds were received in early October.

“The Group has continued its upward momentum in the Bioplastics division and the fundraise of £1.2m net that completed in early in the fourth quarter will support both existing business positions and a more vigorous approach to this fast growing market.

“Trading conditions for the RF division remain as expected.

“It is against this backdrop that the board expects the full year results to be in line with current market expectations.”