Biome Technologies plc (LON:BIOM) announced its audited final results today for the year ended 31 December 2020.
Highlights:
Final Results
· Another strong year for the Bioplastics division with revenue growth of 65% building on the 81% revenue growth achieved in 2019. The division enters 2021 with a healthy pipeline of customer positions and prospects.
· RF Technologies division revenues reduced to £0.8m due to the ongoing over-capacity in the division’s core fibre optics manufacturing market.
· Reported Group loss before interest, interest, taxation and amortisation (LBITDA) of £0.9m (2019: LBITDA of £0.5m), in line with market expectations, with Group operating loss of £1.6m (2019: loss of £1.0m).
· Group cash position as at 31 December 2020 was £1.7m (31 December 2019: £2.1m) with no debt.
Paul Mines, Biome Technologies Chief Executive Officer said: “2020 saw further strong revenue growth from the Group’s Bioplastics division reflecting the conversion of the pipeline of opportunities that it entered the year with. New opportunities from both existing and new customers continue to present themselves both for bioplastic packaging from the coffee sector and other segments of the food and beverage packaging market. We will continue to work our cash resources to maximise our ability to overcome the challenges posed by Covid-19 and deliver good medium-term growth for shareholders”.
Chairman’s Statement
Business performance
2020 was a pivotal year for the Group with its Bioplastics division’s sales growing to a record £4.9m (65% increase over 2019), as we continue to benefit from the momentum in supplying compostable bioplastics to growing market sectors. By contrast, our RF Technologies division was, as anticipated, adversely affected by overcapacity in the fibre optic cable manufacturing sector.
Both businesses operated against the ongoing backdrop of the Covid-19 pandemic and lockdowns, which, whilst hindering our efforts to diversify the RF Technologies division’s customer base, demonstrated the resilience of the bioplastics market and the strength of Biome’s offering and relevance to this rapidly expanding compostable materials market.
As a result of these trends, Bioplastics represented 86% of Group revenues in the year.
During the year we completed an equity placing and subscription that raised an additional £1.0m, net of costs, to strengthen our balance sheet to support the continued expectations of growth in Bioplastics.
Bioplastics division
In our placing circular to shareholders last year, we laid out four growth drivers which we believed would deliver significant value for shareholders and maintain our KPI target of 40% revenue growth in the Bioplastics division through 31 December 2023. I would like to mention these growth drivers again specifically and update you on progress in each of them:
1. Continued growth from existing customers with existing products, especially flexible film in both industrial and particularly home compostable formats, in the North American market.
Growth from our existing customers and products remains positive. We expect growth in flexible film in North America to be more pronounced in the medium term.
2. Filtration mesh: The Company envisages growth with a second end-customer with a material that has been proven with an existing customer over the last three years. Implementation of this project is underway.
This project is going well, and we confidently expect implementation to complete later this year. As recently announced, our second end-customer has placed orders for equipment that increases their capacity to utilise Biome’s filtration mesh on a significant proportion of their installed capacity. Revenues will become significant and recurring from H2 2021 and for the whole of 2022, thus delivering a major part of our KPI target.
3. Coffee pod material: The Company launched a project for a heat stable material for coffee pods within the US at the end of 2019. Commercial sales of this product are gaining momentum.
In addition to continued demand from the lead customer (as previously announced) this material is now being trialled at several other end-user organisations. We expect significant commercial progress in this area in H2 this year and beyond.
4. Packaging film: The Company is working on seven new customer projects that focus on the conversion of flexible packaging to compostable formats. Six of these projects are for the North American Market.
Six of these original projects continue at pace with trials either taking place in Q1 or expected for Q2 2021. One project with an end-user in the USA has been suspended due to the pandemic. A further pipeline of new customer projects of scale has been added to this growth driver and trial orders have been placed by customers in Q1 this year. We expect two or three of these to become commercially meaningful and generate recurring revenue towards the end of this year.
Over the last seven years, Biome Bioplastics has coordinated significant research and development funding in conjunction with leading universities, in pursuit of bringing a new family of novel bio-based and biodegradable polyesters to market. Exciting new materials are now emerging, and we have recently announced our success in partnering with Innovate UK, the UK’s innovation agency and a leading manufacturer to bring a biodegradable tree-guard to market. This project is still at a relatively early stage and it is therefore too early to predict the scale or timing of production orders. However, the Board is encouraged by the support and reception that this initiative has already gained.
We believe that the progress described above highlights the growing reputation of our Bioplastics business for innovative materials and how it is leading to market success and penetration, particularly in the USA.
RF Technologies division
The downturn in demand for capital goods in the fibre optic cable manufacturing sector that the division first saw in 2019 continued throughout 2020. The division’s efforts to diversify its revenue stream were hampered by the ongoing Covid-19 pandemic, as it became difficult to engage with new customers and a number of potential opportunities were put on hold as our clients deferred capital expenditure. In the face of the ongoing difficulties in the fibre optic market and other sectors, it was necessary to implement a number of cost reduction measures. 2021 has started with some glimmers of recovery in the fibre optic sector and we have started receiving more enquiries both for new fibre optic furnaces as well as spares and service orders, although we do not expect to see a material pickup in the near future.
Covid-19
The Group continues to monitor the ongoing impact of the Covid-19 epidemic and places high importance on caring for its staff and customers. Adjustments made in 2020 to commercial and manufacturing activities remain in force and are continually reviewed to ensure they provide a safe operating environment.
With a year’s experience of working with the varying restrictions in both in the UK and overseas, the Group has a better understanding of the commercial impact of the pandemic and has adapted accordingly to meet the opportunities and risks presented.
We have only experienced minor supply chain issues in the Bioplastics division but continue to be vigilant in case of any disruption. Business development has been successfully managed remotely with use of video conferencing to regularly interface with customers.
The RF Technologies division was more adversely impacted by Covid-19. The division’s ongoing activity to widen the markets that it sells into has been frustrated by a slowdown in capital expenditure and restrictions placed on travelling to and meeting with potential customers.
A number of cost saving actions have been taken to reduce the RF Technologies division’s overhead expenditure including a reduction in the number of staff and use of the Coronavirus Job Retention Scheme to maintain operational capabilities.
Whilst we expect to see a continuing impact from Covid-19, the business has adapted to the challenges that the pandemic has presented, and we look forward to a more normal environment in the future.
Results
The Group’s results were in line with the market forecast for the year ended 31 December 2020.
Consolidated Group revenue for the year was £5.7m (2019: £7.0m) reflecting the increase in Bioplastics sales offset by the decline in those from the RF Technologies division. Group gross margins for the year were 29.4% (2019: 43.5%) reflecting the changing mix of sales towards volume Bioplastics.
The Group loss before interest, taxation, depreciation and amortisation (LBITDA) was in line with market expectations at £0.9m (2019: £0.5m LBITDA). A Group operating loss of £1.6m for the year was incurred (2019: £1.0m loss).
During 2020, the Board concluded that, to gain a more accurate representation of the costs and profits associated with the Bioplastics and RF Technologies divisions, certain costs previously accounted for as part of the Central Costs division would be allocated, to the operating divisions. These costs include insurance, accounting, administration, facilities, and executive management activities attributable to the operating divisions. A restatement of the segmental information for 2019 has been made to allow users of this information to compare it on a consistent basis.
The Bioplastics division achieved an increase in sales to £4.9m (2019: £3.0m) representing 65.4% growth as the division grew its sales with both new and existing customers and demand for compostable products strengthened. The division recorded a LBITDA of £0.1m which was an improvement over the prior year (2019: £0.8m LBITDA restated) as sales revenue increased. The resulting operating loss also narrowed to £0.5m (2019: £1.2m loss restated).
The RF Technologies division’s revenues were £0.8m (2019: £4.0m) reflecting the hiatus in demand in the fibre optic market compounded by the effects of the Covid-19 pandemic. The division reported a LBITDA of £0.4m (2019: £0.8m EBITDA restated) and an operating loss of £0.5m (2019: £0.7m profit restated). These results reflect management actions to reduce costs where possible in the light of market conditions and benefiting from the UK Government’s Coronavirus Job Retention scheme.
The Group’s cash balances as at 31 December 2020 were £1.7m (31 December 2019: £2.1m) reflecting trading losses for the year offset by the net equity fund raise of £1.0m in the year. The Group had no debt as at 31 December 2020. Capitalised product investment in the Bioplastics division was £0.3m (2019: £0.3m).
Strategy
The Group continues to execute on its strategy to be a leading player in its chosen markets. In both markets addressed by the Group our products are developed to meet our customers’ demanding requirements and incorporate a high level of technological knowhow that differentiates our offerings from the competition.
In the Chairman’s statement, made as part of the interim results for 2020, we updated and restated our high level Key Performance Indicators (KPIs) to extend the period they cover to 31 December 2023 and to reflect the continued growth in the Bioplastics division as well as the market headwinds facing the RF Technologies division. The revised KPIs and the progress made as at 31 December 2020 is set out below: –
| • | 40% annual revenue growth in the Bioplastics division. |
| During the year ended 31 December 2020, the division exceeded this target with revenue growth of 65.4%. | |
| • | Bioplastics division’s profitable revenue growth to achieve a 10%-12.5% EBITDA margin by the end of the KPI period. |
| Good progress was made towards this KPI as the Bioplastics division’s LBITDA narrowed to 2.4% for 2020 compared with 27.4% LBITDA in 2019 (calculated on a like-for-like basis). | |
| • | Continued diversification of the Group’s turnover by product and market to ensure that no single product or end customer contributes more than 15% of revenues by 2023. |
| The Group had two customers (2019: two customers) who each accounted for more than 15% of Group revenues. In 2020, both of these customers were in the Bioplastics division as their use of Biome products continued to grow. The two customers referred to are converters of material for a further number of end customers. Good progress is being made to diversify the number of end customers and the variety of products being sold. | |
| • | Continued investment in the Group’s next generation of products by spending significantly more per annum on average than the £0.3m per annum average spend over the previous strategic objective cycle. |
| The Group met this target with £0.7m R&D investment in the year. |
Board and personnel changes
In October 2020, we were pleased to announce the appointment of Rob Smith as Chief Financial Officer. Rob is an experienced ‘C-level’ executive with many years’ service with technology-based AIM listed SMEs both as CFO and CEO and having most recently been CEO at Filtronic plc.
Post year-end Michael Kayser confirmed his decision to retire from his role as non-executive director and chairman of both the Remuneration and Audit Committees. Michael has served Biome exceedingly well during a very exciting 10 years for the business.
We are pleased to welcome the appointment of Simon Herrick, as a non-executive director. He will be a member of the Nominations Committee and will chair both the Audit and Remuneration Committees. Simon qualified as a Chartered Accountant with Price Waterhouse and has held a number of executive director roles with listed companies including Northern Foods plc, Debenhams plc and Blancco Technology Group plc. Simon is currently NED and chair of Audit and Remuneration Committees at both Ramsdens Holdings PLC and FireAngel Safety Technology Group plc.
Race to Zero
As recently announced, Biome Technologies has signed up to the United Nations Race to Zero Climate Campaign and is committed to reducing its carbon emissions in line with publicly disclosed targets. We will commence reporting on our progress on this vital subject in our results for the year ending 31 December 2021.
Outlook
We believe that the growth phase that the Bioplastics division has entered represents a permanent move to more sustainable materials and confirmation that our strategy is working. We expect that the opportunities we have secured, and that are starting to turn into repeat business, are only the beginning of a market shift to more sustainable products. The RF Technologies division remains susceptible to market disruption caused by Covid-19 but we are encouraged by a slight improvement in its outlook; we will continue to closely monitor the ongoing progress of the division.
Trading in the first quarter of 2021 was in line with our expectations and the outlook for the year remains unchanged. We continue to manage our cash resources to ensure that we are able to achieve sustainability for the Group.
John Standen
Chairman
Strategic Report
Biome Technologies plc is a growth orientated, commercially driven technology group. Its strategy is founded on building market-leading positions based on patented technology and serving international customers in the bioplastics and radio frequency heating 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. The growing portfolio of products is driven by customer requirements and compatible with existing manufacturing processes. They are market rather than technology led.
The directors consider its shareholders, employees, customers and suppliers as its key stakeholders and the divisional analysis below outlines the strategies that have been adopted to promote the success of the Group and to meet its objectives.
Biome Bioplastics Division
The Bioplastics division achieved sales revenue of £4.9m (2019: £3.0m), an increase of 65.4%. This increase in reported revenues related to existing products as well as new product launches and reflects the continuing increased activity and enquiry levels that currently exist both in the Bioplastics division and also the wider market. Staffing and resourcing levels were adjusted accordingly to accommodate this increased activity, which is anticipated to maintain its upward trajectory over the coming years. The net effect of the increase in revenues was to decrease the division’s operating loss to £0.5m (2019: £1.2m loss restated).
Markets
Plastics and their use or misuse by humanity remains a key environmental topic for both the UK and overseas markets. There is sustained pressure from consumers, media and governments to reduce the environmental impact of plastics. In recent years, the focus of this pressure has been on the “end-of-life” of such materials, how they are disposed of and the consequence of fugitive release to the environment. In addition, with rising concerns regarding climate change, there is greater interest in how such materials might also be manufactured with lower carbon footprints.
The compelling case for compostable (biodegradable) bioplastics lies in their ability to ensure that organic food waste reaches appropriate treatment (e.g. industrial scale anaerobic digestion and composting facilities) and that the resulting digestate and compost does not contain persistent plastic contamination when spread to soils. This is driving the growth of the compostable packaging market in sectors such as food waste bags, coffee pods, tea bags and other food contaminated packaging formats.
The growth of the compostable plastics market is facilitated when there is a clear route for food waste and food contaminated packaging to reach appropriate sorting and treatment facilities. This requires appropriate labelling, user education, collection, sorting and treatment capacity. The quality of such disposal supply chains varies considerably by geographic territory and often within countries although there is, in general, a move to improve and scale-up such activity.
Arguably, the consumer desire to change the plastic model is pulling through increased demand for compostable plastics at a rate that is faster than the disposal supply chains are able to adapt to. As a result, there is increased demand from the market for bioplastics that can be composted at home. Whilst it is a minority of the population that has the access and/or desire to treat organic waste and packaging at home, those that are are highly motivated to treat such waste appropriately. This is driving the compostable plastics market to producing and certifying products that are suitable for this end-of-life solution. Such products are required to compost at lower temperatures and in less well managed conditions than can be expected at industrial facilities.
The case for bio-based bioplastics is driven by the growing scientific evidence that the use of biogenic inputs reduces the carbon footprint of such materials and will in time lead to a more sustainable plastics industry. There are a limited number of territories that legislatively require bio-based inputs in some plastics, but it might be expected that this trend is likely to accelerate. There is some evidence that some consumers will choose bio-based materials when offered a choice, but this appears, at present, to sit behind the desire for compostable functionality.
The UK market has been somewhat slower to embrace compostable and bio-based materials than some other territories. Whilst there is considerable focus on plastic waste, there is still a continuing debate of how best to manage the problem. The local council control of the disposal supply chain and its wide variability is seen by some as part of the problem and a move in England towards universal food waste collection by 2023 presents an opportunity for compostable plastics. At present, the UK market remains a smaller part of the Bioplastics division’s short-term focus with the more immediate sales opportunities and growth being in the US market.
Cost and functionality will remain key hurdles over the widespread adoption of bioplastics over petro-chemical plastics. Current adoption is therefore driven by consumer pull, and their willingness to pay a premium for biodegradability/compostability, or government legislation. To overcome these hurdles the Bioplastics division focuses on areas of the market where there is a high technical performance requirement, the cost of the biomaterial is a small fraction of the end product price, and where there is a consumer willingness to convert to a biodegradable material.
Research and development within the Bioplastics division is therefore focussed on these three areas and in particular targeted towards customer requirements for a biodegradable solution. The commercial lifecycle of our product developments can be categorised in the following stages of the product lifecycle:
| • | Research phase – technology and product development occurring within Biome’s own laboratories or at external support facilities |
| • | Development phase – the product is being developed and tested with small scale supplies to customers for end use testing |
| • | Initial manufacturing phase – the product is signed off by the customer as suitable for its requirements and is now undergoing significant long-term testing to ensure the end product can be run in commercial quantities across the supply chain |
| • | Commercial phase – the product has been through the above phases with the customer and is now achieving regular and significant sales with the end product being purchased and used by the final consumer |
Technical Development
Biome Bioplastic’s development work remains focussed on innovative developments where there is a customer requirement for the product and a willingness to pay a premium for the environmental attributes. During 2020, the development team worked on a variety of technical challenges that included the development of home compostable materials, the improvement of oxygen and vapour barrier performance, the soil degradability of materials to be used in tree shelters and the improvement of temperature performance for a variety of end-uses.
The Bioplastics division also continued its work in medium term Industrial Biotechnology research into the transformation of lignocellulose (often sourced from agricultural waste) into low cost bioplastics using microbial and enzymatic routes. If successful, it is anticipated that this work will result in bioplastics with improved functionality at a cost comparable to current petro-based plastics. This development work continues to be supported by research grants and much of the work is undertaken in collaboration with leading UK universities.
Stanelco RF Technologies division
The RF Technologies division is a specialist engineering business focused on the design and manufacture of electrical/electronic systems based on advanced radio frequency technology.
The division’s core offering is the supply of fibre optic furnaces, although the business is also exploring other markets where its expertise in induction heating can be utilised. Total revenues in 2020 were significantly reduced at £0.8m (2019: £4.0m). This reduction was caused by the combined effects of the continued low level of capital goods expenditure in the division’s main telecoms fibre optic market due to the previously reported excess capacity for fibre optic industry and the Covid-19 pandemic that has caused delays in capital equipment purchases throughout the UK industrial sector. As a consequence of the reduced sales, the division incurred an operating loss for the period of £0.5m (2019: £0.7m profit restated).
The business currently focuses on four key revenue streams:
Optical Fibre Furnace Systems
The RF Technologies division is a world leader in the design and manufacture of induction furnace systems used in the manufacture and processing of silica glass “preforms” to produce optical fibre. Each system is bespoke to customers’ exact requirements. There is currently a continuing imbalance in the global demand for optical fibre compared to the installed capacity base. This overcapacity affected demand for furnaces in 2020 with no orders being received during the year. It is expected that as demand for fibre optic cable grows, the imbalance in manufacturing capacity will reverse in the mid-term. The Group is receiving enquiries for specific types of furnaces and spares that suggests that capacity utilisation is increasing. Nonetheless, we do not expect to see a significant change in market dynamics during 2021.
Plastic Welding Equipment
These units are used in a multitude of end-user applications including the nuclear, medical and industrial sectors. The equipment is provided in either hand-held, mobile or fully automated static solutions, dependent on customers’ requirements.
Induction Heating Equipment
The division sells bespoke induction heating equipment mainly into the UK industrial sector. Whilst this is a small part of the division’s sales, it is a strategic aim to increase the equipment offering and expand sales of this type of equipment.
Service and Spares
The business continues to support its large installed equipment base through the provision of maintenance support, system upgrades and specialist spares across the globe.
Principal Risks and Uncertainties
Biome is subject to a number of risks. The Directors have set out below the principal risks facing the business. The Directors continually review the risks identified below and, where possible, processes are in place to monitor or mitigate all of these risks. Risks and uncertainties associated with the on-going Covid-19 pandemic are considered in a dedicated sub-section to the principal risks and uncertainties.
| Risk | Nature | Mitigation strategies |
| Political, Economic and Regulatory Environment | The Group is subject to political, economic and regulatory factors in the various countries in which it operates. There may be a change in government regulation or policies which materially and/or adversely affect the Group’s ability to successfully implement its strategy.Some of the Group’s products are employed in the food and pharmaceutical industries, both of which are highly regulated. There is a risk that the Group may lose contracts or be subject to fines or penalties for any non-compliance with the relevant industry regulations. | The Directors aim to focus their product range on areas where demand is not reliant on government regulation.The Group ensures its staff are well versed in the regulatory environment of its end-use industries and regularly reviews its product portfolio to ensure compliance with relevant regulations. |
| Exchange Rate Fluctuations | The Group exports the majority of its products and therefore fluctuations in exchange rates may affect product demand in different regions and may adversely affect the profitability of products provided by the Group in foreign markets where payment is made for the Group’s products in local currency. | The Directors are informed regularly of the potential impact of exchange rate movements on the business and act to mitigate any adverse movements wherever possible. In order to mitigate the medium term impact of any adverse exchange rate movements, the Group will look to move production and match the currency of its input costs with those of the contractual selling price thereby reducing the currency movement risk to the gross margin of the product. |
| Suppliers and Raw Materials | The Group’s products and manufacturing processes utilise a number of raw materials and other commodities. In particular, the Bioplastics division requires a few, key raw materials to manufacture its biodegradable polymer resins. There are very few suppliers of these key raw materials and with the current increased demand for biodegradable products there is a risk that the division may not be able to purchase the required volumes of materials to meet customer demand or that prices may be increased at short notice. | To mitigate this risk, the division is seeking to validate new materials coming onto the market which may be used in substitution. |
| Intellectual Property | Although the Group attempts to protect its intellectual property, there is a risk that patents will not be issued with respect to applications now pending. Furthermore, there is a risk that patents granted or licensed to Group companies may not be sufficiently broad in their scope to provide protection against other third party technologies.Other companies are actively engaged in the development of bioplastics. There is a risk that these companies may have applied for (or been granted) patents which impinge on the areas of activity of the Group. This could prevent the Group from carrying out certain activities or, if the Group manufactures products which breach (or may appear to breach) such patents there is a risk that the Group could become involved in litigation which could be costly and protracted and ultimately be liable for damages if the breach is proven. | The Group takes professional advice from experienced patent attorneys and works hard to win patents applied for and to ensure that the scope is sufficiently broad.The Group keeps up-to-date with its competitors’ product developments and patent portfolios and aims to ensure that no infringements occur. Professional advice is sought from experienced patent attorneys if there are any concerns. |
| Competition | There is a risk that competitors may be able to develop products and services that are more attractive to customers, either through price or technical performance, than the Group’s products and services. | The Group aims to be ahead of the competition through working closely with customers to produce products that meet their exact requirements rather than offering “off the shelf” solutions. |
| Commercialisation of New Products | There is a risk that the Group will not be successful in the commercialisation of its products from early-stage research and development to full-scale commercial sales. The Group develops a number of products and some may not prove to be successful. Specifically, the risks associated with the product life cycle are as follows:· Research and Development phase – the development of the products may prove not to be technically feasible or do not exactly match the perceived customer need· Initial manufacturing phase – whilst the product matches the customer needs it may not be able to be produced at the required commercial speeds and/or at the required efficiency and quality· Commercialisation phase – the product may be superseded either through price or a competitor product being more advanced | The Directors ensure that regular reviews of product development are undertaken so that unsuccessful developments can be terminated early in their life cycle. Impairment testing of the capitalised costs is performed twice a year with any impaired capitalised costs written off. |
| Customers and Customer Concentration | The Group’s ability to generate revenues for a number of its products is reliant on a small number of customers. If one of these customers was to significantly reduce its orders, then this could have a significant impact on the Group’s results. | The Group works closely with its customers with the aim of ensuring that its products evolve in line with their requirements. In addition, the Group is continually seeking to add to its customer base and, as its revenues grow, seeks to become less dependent on any single customer. |
| Brexit | The UK left the European Union during the year under review and the transition arrangements ended on 31 December 2020. The new trade deal entered into between the UK and the European Union was in negotiation until the end of the transition period and therefore we have had to implement new processes with little forward notice of the details of trading arrangements. This has caused some minor short-term disruption of both exports to and imports from countries in the European Union.The majority of the Bioplastics products that are produced in the European Union are sold either locally into the continental European market or exported directly to the US market. Whilst deliveries of these goods are not therefore transported through the UK new local documentation and compliance procedures have been required for us to export from the EU. | The Group has worked closely with import and export agents as well as local advisers in Europe to ensure that we are compliant with the various new regulations now in force.The Group will continue to monitor local regulations as the new requirements settle down and will introduce additional, proportionate mitigating policies as required. |
Covid-19
The Covid-19 pandemic continues to significantly impact individuals, businesses, markets and economies, but despite this there has been minimal direct impact on the Group’s operations. The Group has continued its manufacturing and development operations in accordance with Government advice.
New orders for products supplied by the RF Technologies division have reduced as our customers have reduced their investment activities. However, this must also be seen in the light of an overall excess in capacity in our main fibre optic market that had already seen suppressed sales in 2019.
The Biome Bioplastics division had to conduct some trials virtually, where physical attendance was not possible or permitted and it utilised the skills and expertise of a consultant in the US to assist with some of these trials.
The table below details some of the key risks and the strategies that we have introduced to mitigate the risks:
| Risk | Nature | Mitigation strategies |
| Financial | Increased market risk and reduced revenues heighten the liquidity risk whilst deterioration of the economic market heightens credit risk.Economic disruption may also impact financial markets including currencies, interest rates, borrowing costs and the availability of debt and equity finance.The impact of Covid-19 on our customers and their ability to continue to trade and pay invoices on time and the consequential impact on the Group’s cashflow.Impact of going concern assessment. | The Group is tightly controlling overhead spend and actively reducing spend where possible and has used the UK Government’s Coronavirus Job Retention Scheme (Furlough) to offset employment costs where staff have not been able to work due to “lockdown” restrictions and disruptions to order flows from customers.It was necessary to make a number of staff redundant in the RF division.Some of the Group’s customers have experienced liquidity issues during the period and this has meant that we have had to increase our provision for slow moving debts. As a result, the Group has focussed its activities on supplying customers with stronger financial positions.A thorough going concern assessment was conducted that considered a number of scenarios and included a reverse stress test. The directors concluded that there is sufficient working capital for the Group to meet present and future obligations over the next 12 months. |
| Health and safety | The health and safety of our employees is of paramount importance. There is a risk that our colleagues may come into contact with carriers of Covid-19 and bring it in to our facilities. In order to manage the risks and adhere to government guidelines the Group had to change the method of operation and implement measures to mitigate the risk. | The Group was quick to set up a Covid-19 response team and implement a range of measures to combat the risks of Covid-19. This included asking all employees to work from home that were able to do so. This worked well as our principal IT systems are cloud based or accessible remotely.A proportion of our employees were not able to work from home as they need to access facilities at our Marchwood facility. To this end, the Group carried out risk assessments and put in place a dedicated `Covid Team’, to ensure compliance of the implemented positive safety measures and to undertake a continual review of the effectiveness and relevance of such measures. Further risk assessments will be carried out if deemed necessary.A Covid policy that was communicated to staff remains in force. Signage around the building is displayed; to inform staff of maximum occupancy levels within certain areas of the building, as well as a reminder of social distancing and the frequency of hand washing. There has been an increase in the frequency and thoroughness of the cleaning provided by external contractors.All staff have been issued with a `Covid Pack’, consisting of hand sanitisers, anti-bacterial wipes and face masks. Staff are consulted with about Covid and encouraged to raise any concerns. |
| Cyber Security | Covid-19 has increased cyber threats from cyber criminals and other malicious groups who are targeting businesses by deploying Covid-19 related scams and phishing emails. Employees working from home have also heightened cyber security risks. | Biome has effective cyber security controls and has increased the focus on addressing security alerts as soon as they arise. Security education of employees has been increased highlighting security threats. |
Biome Technologies also announced today the appointment of Simon Herrick as a Non-Executive Director of the Company. He will join the Board with immediate effect. He will assume the responsibilities previously held by Michael Kayser as Chair of the Audit and Remuneration Committees, after Michael retires from the Board at the Company’s AGM on 21 April 2021.
Simon has significant experience in senior financial roles. He has been a Non-Executive Director and has Chaired the Audit and Remuneration Committees of Ramsdens Holdings Plc since 1 January 2017 and of FireAngel Safety Technology Group plc, having been appointed to that role on 24 September 2019.
Simon has previously served as interim CEO and interim CFO at Blancco Technology Group plc from 2017 to 2018 and interim CFO of Crew Clothing Company Limited from 2015 to 2016. He was a board director without portfolio at Debenhams from 2011 and in January 2012 was appointed CFO, a role he fulfilled until 2014. In January 2010, he was appointed as Group Finance Director of Northern Foods plc and as acting CEO from December 2010 until the company’s sale and delisting in 2011 and was previously CFO at Darty plc between 2005 and 2010.
Prior to the above roles, Simon had held senior finance roles at, PA Consulting Limited, Regus PLC, Hays PLC, Pepsi Cola International and Alcatel Alsthom.
Simon qualified as a chartered accountant at Price Waterhouse in 1989. He is a fellow of the Institute of Chartered Accountants in England and Wales and holds an MBA from Durham University.
John Standen, Chairman, commented:
“We are delighted that Simon is joining us. He has wide and strong financial experience, gained from senior roles in a range of companies and business environments, which will be of great value to us in the future. We are looking forward to working with him.
I would also like to take this opportunity to emphasise our thanks to Michael Kayser for his tremendous contribution to our development over the last 10 years. We wish him well.”
