# Biome Technologies current trading continues in line with the Board’s expectations (LON:BIOM)

- Link: https://www.directorstalkinterviews.com/biome-technologies-current-trading-continues-in-line-with-the-board%e2%80%99s-expectations-lonbiom/4121023827
- Published: 2021-09-22T07:22:00+01:00
- Author: Amilia Stone

**[Biome Technologies](https://www.directorstalkinterviews.com/company/biome-technologies-plc/biom.l)
plc ([LON:BIOM](https://www.directorstalkinterviews.com/company/biome-technologies-plc/biom.l))**
Chief Executive Officer Paul Mines** **caught up with DirectorsTalk for an exclusive
interview to discuss the highlights from the interim results, updates on the delay
on the coffee filter material, shipping issues, growth in the Bioplastics division,
tree-guards and the positive leading demand indicators for the fibreoptic division.

Biome Technologies is a growth orientated commercially-driven technology group. 
The strategy is founded on building market leading positions based on patented technology
and serving international customers in invaluable market sectors. Earlier, the company
published interim results for the six months ended 30 June 2021 and with me to discuss
the update is CEO Paul Mines.

**Q1: First off, can you just tell us what the highlights from the results were?**

**A1**: The highlights were the Biome Bioplastics division was the principal revenue
generator for the Group, with growth of 7.3% this first half versus 2020 and that
was despite the logistics disruptions we were hampered by ongoing issues in the 
global shipping industry. Also, importantly, a key new customer for our compostable
coffee filter is debottlenecking their facility and is expected to underpin our 
growth for H2 so that was Bioplastics.

In the Stanelco RF division, we saw tendering activity increase, contract wins in
induction heating and an improvement in the leading demand indicators of the cyclical
fibreoptic market.

Overall, for the Group, our cash position as at the mid-year point was £1.4 million
with no external bank borrowings and current trading continues in line with the 
Board’s expectations as we set out in our updates of the 1st and 29th July.

**Q2: You touched on this earlier, you announced a contractual commitment with a
customer for your coffee filter material earlier in the year and you announced a
subsequent delay in July – can you tell us what’s going on there?**

**A2**: We manufacture a compostable coffee filter mesh that goes into coffee pods
and back in Q1, we began an implementation with a second customer in the US, a large
customer and it was underpinned by a contractual commitment at that time.

During this implementation, the customer hit a hurdle and found that some of the
utilities supplying its factory limited the deployment of our materials. Whilst 
the customer has continued to use reasonable quantities of our mesh, it’s really
limited large scale deployment whilst they did the design and engineering to overcome
that constraint.

The good news is they’re well through that programme and we expect that scale up
to continue and the acceleration of offtake of our material to happen now through
Q4 of 2021.

**Q3: You mentioned shipping issues, can you explain how these are impacting you
and when they are likely to end?**

**A3**: I think this is well known from the press etc. that there are issues moving
goods across oceans and indeed locally due to transportation and lorry haulage issues.
That’s partly out of earlier in the year the jam in Suez Canal but I think more 
profoundly due to uptick of all global economies after COVID.

If I can give an example, some of the containers we’ve sent from Europe to the US
have taken 3 months to get there rather than the normal 2-3 weeks so there’s real
congestion in shipping.

I think the view of the shipping market is that it’s not going to end soon and we’re
adapting with more stock, more focus on logistics but we expect it to be a continued
part of business life for foreseeable future but believe our measures will mitigate
many of those effects as we progress through the second half.

**Q4: Just going back, what’s driving the growth in Bioplastics more generally?**

**A4**: Bioplastics is a fast growing business, it’s at the heart of a transformation
that’s going on in plastics industry as there’s a quest to reduce reliance on oil
and gas, to move to a bio-based input and to have some compostable materials, particularly
in conjunction with food waste.

As a result we are achieving growth in four areas:

We’re seeing continued growth from our existing North American customers, particularly
around flexible film for upmarket packaging.

Our sales of filtration mesh are doing well and, as I’ve said before, are expected
to accelerate in Q4 with one large customer in the US but we have another couple
of customers trialling our materials.

We launched a product for coffee pods in the US in 2019 and that’s gaining momentum
with continued demand from the lead customer plus trials of customers.

Finally, we’re working with a dozen new customers for the conversion of flexible
packaging to compostable formats, again mainly in the US, and we expect those to
be commercially meaningful in the second half of this year.

**Q5: You’ve not mentioned the biodegradable tree-guards which we talked to you 
about earlier in the year?**

**A5**: Yes, we talked about those in the context of them being a development project
but we’ve had such positive feedback from the market on the prototype tree-guards
that we’ve made, that we’re looking to accelerate the commercial deployment in the
UK. We’re not quite commercial yet but we’re looking to see what we can do to bring
forward that commercial launch, maybe to this planting season, this winter, whereas
we had expected it to be next year.

So, we’ll see how we get on with that but we’re doing our best to bring that trial
forward.

**Q6: Now, you mentioned positive leading demand indicators for RF divisions for
the fibre optic market, what do you mean by this?**

**A6**: For Stanelco RF division, one of its core markets is for making fibreoptic
cable and this market has periodic investment cycles and it’s been in a low part
of the cycle since 2018 which was also compounded by the pandemic. For a periods
of time, our customers stopped ordering anything, spares, service, support or indeed
equipment orders.

After a very quiet time in 2020, we are now seeing signs of recovery in spares ordering,
the price of fibre in the end markets going up and we’ve begun to receive requests
for quotations for quite a few pieces of new equipment, across a number of our regular
customers.

We believe it’s only a matter of time before this transitions from requests for 
quote into ordering itself.

Meanwhile, the business is getting on with other work, we’ve been diversifying its
offering to the wider industrial sector and we’re making good progress winning contracts
to underpin the performance in the balance of the year.

_Biome Technologies plc is a United Kingdom-based company engaged in the development
of its business in bioplastics. The Group comprises two divisions: Biome Bioplastics
and Stanelco RF Technologies._

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