Biome Technologies plc (LON:BIOM) Chief Executive Officer Paul Mines caught up with DirectorsTalk for an exclusive interview to discuss their November trading update, growth drivers, compostable plastics, and progress in their RF Technologies division.
Q1: Biome Technologies’ November trading update, you announced continuing growth in the Bioplastics division and a maintenance of revenues in the RF Technologies division, which is in line with the earlier part of the year. If we look at each division in turn, starting with Bioplastics, your statement said that you’re pleased with the strong progress which continues to grow, could you just provide a little bit of more colour on that for us?
A1: As a reminder, the Bioplastics division develops and manufactures both bio-based and biodegradable plastics, and these plastics are often compostable and they’re used predominantly in packaging products by brands around the world.
In the third quarter, the divisions’ revenues were £1.3 million which is an 18% increase on the same quarter last year, and at this point in 2023, we’re now 36% ahead of the prior year.
Q2: So, an impressive first half for Bioplastics then, what’s driving that growth?
A2: We’re seeing particular success continuing in North America, we’re seeing more customers onboarding, using Biome Bioplastics’ materials, this is particularly for packaging films. That’s those soft plastics that go around pouches, bags, often dry food packaging.
These new customers have been adopting our materials and through this year, have been initiating larger volume manufacturing. So, we’re really pleased with that breadth of customers increasing and we’ve also seen increased demand from some of our more established customers, particularly in the coffee pod and coffee products market, their demand is up on 2022 as well.
I think part of that demand is coming from uptick in economies, particularly in the food sector but also, we’ve been following it quite well. We established a permanent employee presence in North America, over the last 18 months we’ve been establishing egal entities there and we’ve put in some back office support systems.
That’s been really important to us working closely with this growing customer set, and indeed, we’ve just added further to that team in the last couple of weeks.
Q3: Can you just remind us what compostable plastics are, and why they’re so important, and growing?
A3: What I‘m going to use as an example is a coffee pod, and actually a coffee pod is, after you’ve used it, the predominant weight in that pod is the coffee itself, it’s not the outer plastic pod. So, it’s really important that, what we would say was ‘food waste’, the coffee in that case, gets back into the circular economy and back into the soil to form compost.
It’s really difficult to separate coffee and the outer plastic container in something like a coffee pod so the kind of products we’ve developed allow you to take that pod, and the coffee inside, and the outer packaging and just put it into the food waste.
The plastic we’ve made it out of is made form biological sources but is also designed to compost into useful compostable material to go back to soil along with the coffee. There are various standards around ensuing that such plastics can do so safely, benignly, don’t cause microplastics and are really safe to the environment when they do that break down.
So, it’s really about the circular economy, writ large, and making sure all the food waste that’s generated gets back into the loop and back into soils and isn’t contaminated by conventional plastics that might cause persistent microplastics.
Basically, these are material that compost alongside food waste. I hope that gives a view of what’s going on.
Q4: Now, I know you have great hopes for the future of the Bioplastics division, what are you doing to drive it?
A4: I think there are three things:
It’s a good market niche to be in, as environmental awareness continues, as government’s legislate more for ensuring that our environment is protected, they are in many jurisdictions favouring materials that are either bio-based or biodegradable. Indeed, Biden in the Inflation Reduction Act, as it’s called which is his big green initiative, announced that they’ve got an ambition for 90% of plastics to be bio-based in due course. So, it’s the right place to be for our business.
We’re developing, I’d like to think great products, and that’s coming out of our research team that’s based in Southampton in the UK, often working with universities in the UK as well. We work with Imperial, we work with Nottingham, we work with Warwick and we work with York as well so lots of good products coming out of that research.
Our team works really closely with our customers, really to understand their needs and support them on their journey as they often transition from fossil-based plastics to bio-based and compostable plastics. Our products are generally ‘drop-in’ products but there are some tweaks that you need to get to know and understand and we help our customers with that, and that’s important as well.
So, I think that good market, good products and really working intimately and flexibility with our customers are the three things that are going to make a difference in this market.
Q5: Just turning to Biome Technologies’ RF Technologies division, how’s that doing?
A5: So, the revenue for the first nine months was £0.8 million, just behind last years’ £1.1 million. The RF business is doing a pivot, whereas it used to be very focused on the fibre optic market, given most of that expansion has now occurred, we’ve been pivoting towards other markets, particularly the medical and food markets.
We are now in some extended discussions with several potential customers regarding contracts that will really propel the RF business ahead. We had hoped that we’d have more of those contracts signed at this point of the year but they’re still moving.
