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(Sharecast News) - Bioplastics and radiofrequency technology company Biome Technologies updated the market on its trading for the third quarter on Monday, with group revenues reaching £5.2m for the first nine months of the year.
The AIM-traded firm said that made for a substantial 19.6% increase compared to the same period last year and aligned with management's expectations.
It said its performance in the third quarter was primarily influenced by reduced revenue recognition in the RF technologies division, counterbalanced by an upswing in revenues from the bioplastics division, which had seen a notable trading improvement in the year-to-date.
As of 30 September, the group had a cash balance of £0.9m, indicating growth from the previous year's balance of £0.65m.
Additionally, the group had £0.85m in outstanding 2026 convertible loan notes and no bank debt.
Within the bioplastics division, third-quarter revenues for 2023 totalled £1.3m, reflecting an 18% increase compared to the same quarter in 2022.
Year-to-date revenues for 2023 reached £4.4m, demonstrating a substantial 36% surge over the prior year.
The board said the bioplastics division had experienced ongoing success, especially in North American markets, with new customers, particularly in the packaging film sector, adopting their materials.
Increased demand was also observed from established customers, albeit with some quarterly variations as newer customers scaled up production.
The firm said it anticipated a more resilient business model due to its expanding customer base and diverse applications.
In contrast, the RF technologies division reported third-quarter revenues of £0.3m, compared to £0.7m in the same period in 2022, and aligned with the second quarter of the year.
Revenues for the first nine months totalled £0.8m, down from £1.1m year-on-year.
The board said the division remained actively engaged in discussions with potential customers concerning contracts that could significantly impact revenue and profits in 2024.
Its management said it was optimistic about the novel market sectors the division was exploring, though they exercised caution over the timeline for converting opportunities into orders and revenue recognition.
Collaborative designs with customers were said to be a critical factor in the process.
"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 directors said.
"The RF technologies division's team is working hard to convert the pipeline of sizable opportunities they have built.
"Detailed contract discussions on several projects are proving extended and some uncertainty as to timing remains."
The board said it was 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."
At 1329 GMT, shares in Biome Technologies were down 6.78% at 114.2p.
Reporting by Josh White for Sharecast.com.
