Biome Technologies plc (LON:BIOM), a leading bioplastics and radio frequency technology business, has provided an unaudited trading update for the quarter ended 30 September 2023.
Group revenues for the nine months to 30 September 2023 were £5.2m, a 19.6% increase over the same period last year (2022 Q3 YTD: £4.3m). The results are in line with management expectations. Performance in 2023 Q3 reflects lower revenue recognition in the RF Technologies division, offset by an increase in revenues from the Bioplastics division where, year-to-date, we are seeing a strong improvement in trading.
The Group had a cash balance at 30 September 2023 of £0.9m (30 September 2022: £0.65m) and had 2026 convertible loan notes outstanding of £0.85m and no bank debt.
Bioplastics Division
The division’s revenues in 2023 Q3 were £1.3m, an 18% increase on 2022 Q3 (2022 Q3: £1.2m). 2023 year to date revenues were £4.4m, 36% ahead of the prior year (2022 Q3 YTD: £3.2m).
The Bioplastics division is seeing continued success, particularly in North American markets. Several new customers, particularly for packaging films, have been adopting our materials and are initiating larger volume manufacturing. We have also seen increased demand from more established customers than in 2022. We are seeing some variation in quarterly demand as our newer customers ramp up their production. However, we believe that the breadth of customers and applications is taking us towards a more resilient business model.
RF Technologies Division
Revenues in the RF Technologies division for 2023 Q3 were £0.3m, compared to £0.7m in Q3 2022 and in line with 2023 Q2 (2023 Q2: £0.3m). Revenues for the nine months to 30 September 2023 were £0.8m (2022 Q3 YTD: £1.1m).
The division continues to be in extended discussions with several potential customers regarding contracts that would have revenue and profit recognition potential of significance for 2024.
Management is pleased with the novel market sectors in which the division is building a pipeline of potential new business and the scale of some of these opportunities. We remain cautious on the precise timing of converting these opportunities into orders and the associated revenue recognition, as much of this work requires considerable new collaborative designs with customers.
Group Outlook
The Board is pleased with the strong progress of the Bioplastics division which continues to grow. It is particularly encouraging to see the ongoing diversification of the customer base that will provide a broader platform for potential growth in due course in line with our stated strategy.
The RF Technologies division’s team is working hard to convert the pipeline of sizable opportunities they have building. Detailed contract discussions on several projects are proving extended and some uncertainty as to timing remains.
The Biome Technologies’ Board remains confident in its revenue expectations for the Group as a whole due, in particular, to the robust performance of the Bioplastics division. However, the finalisation of discussions in relation to two of the RF division’s projects, whilst progressing and expected to complete in due course, is taking longer to finalise than originally expected. As a result, and given the proximity to the year-end, there is an increasing risk that these delays will impact on the level of adjusted LBITA and cash receipts in the 2023 financial year. Whilst this is not the position the Board would have wished for, it remains confident that these two projects will be delivered, albeit now in the 2024 financial year.
