Biome Technologies is a small, usually loss-making AIM quoted company, with two divisions. The Bioplastics arm’s goal is to formulate and supply a range of innovative bioplastics technology that replace existing oil-based materials. In particular there is a focus on developing technologies relating to an outer packaging and non-woven filter mesh for the US coffee pod market, which would lead to a totally compostable coffee cup; and hopefully transform the company’s fortunes.

The other, older division is Stanelco RF Technologies and this division designs, builds and services advanced radio frequency (RF) systems mainly for large furnaces for the fibre optics market.

Biome markets its fully compostable coffee cup

For some years now it has been Biome’s wish that the bioplastics arm become the largest generator of revenue for the whole group, possibly because biodegradable plastics are becoming very popular globally because of the concerns about climate change. In fact, commenting on the final results for 2017 early in 2018 Chairman John Standen said: “The results show some improvement in profitability over the previous year, albeit they do not demonstrate the step-change in underlying performance we expected earlier in the year”.

Nevertheless, since Standen made his statement Biome has been making progress in bringing the coffee cups into commercialisation. Also, some new product lines were brought in to play such as a new material for single serve pods in the sports nutrition market. Overall, Biome had one of its best years in 2018. A trading update for the six months ended 30 June 2018 was issued in late July well ahead of the unaudited interim results. These results presaged that total group revenues for the first half would be substantially higher at £4.3m — a 47 per cent increase.

They also indicated that there would be a small profit for the full year and as it turned out there was an £80,000 pre-tax profit. .

Biome seemed to be on a roll. But the unaudited interim results when published on 7 September 2018 contained something unexpected that could be seen as a harbinger of tougher times to come. Demand for Stanelco RF’s products was update forecast £4.3m) against £3m in 2017. The revenue split for the period shows that Stanelco (RF)’s income at £3.4m was double that in 2017. Bioplastics on the other hand came in at £900,000 compared to £1.2m in the comparable period in 2017.

The demand for Stanelco RF’s products was predicted to continue until the end of 2018. This turned out to be the case. Revenue for 2018 was £8.85m (2017: £6.23m) and more than half of it was from Stanelco RF. The question that was asked was would the high demand run into 2019. Fast forward to the trading update released by Biome on 31 October 2019 for the nine-months ended September 30 2019. The answer is that the exceptional demand has sort of held up. For the first nine months of 2019 the update says Bioplastics revenue was, at £2.3m, above the level for all of 2018. The income for the nine months for Stanelco RF was £2.8m (2018: £5.5m) This makes total group revenue for the nine months £5.1m (2018 £7.0m).

The company says that Stanelco RF should receive a boost in the final quarter 2019 because of a multiple furnace order. It also remarks that the Bioplastics division has continued to build momentum. Despite this, market expectations are that the final results will be in line with forecasts, namely a drop in revenue and a return to pre-tax losses.

One share price analysis group is predicting a fall in revenue to £7.2m for the 2019 12 months and pre-tax losses of £950,000. Meanwhile, the hare price of the ££7.28m market cap company was 260p last Friday evening- a 52-week low against a 12 month high of 601p. Clearly turning Bioplastics into the flagship division and putting the whole company on to a steady profitable footing is going to take longer than expected,


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