Biome Tech Regulatory News (BIOM)

RNS Number : 7319R

Biome Technologies PLC

27 August 2010

 

27 August 2010

 

Biome Technologies plc ("Biome", "the Company" or "the Group")

 

Interim Results for the six months ended 30 June 2010

 

Financial Highlights

 

·; Group revenue up 40% to £6.7m on a like-for-like basis*

·; Loss from operations reduced to £1.2m (2009: loss £1.5m)

·; Loss before tax reduced to £1.7m (2009: loss £2.7m)

·; Cash utilised by operations reduced to £0.7m (2009: £2.4m)

·; Closing Group cash position £4.7m, following completion of equity fundraising in June 2010, raising £2.7m net of expenses

 

* Reported Group revenue in 2009 of £8.1m included 100% consolidation of Biotec JV - now only 50% consolidated;

Group revenues reduced from £8.1m to £6.7m in the six months ended 30 June 2010, reflecting the change in accounting treatment of Biotec described above

 

Business Highlights

 

·; 34% growth in Bioplastics Division sales on a like-for-like basis

·; 53% growth in sales made by Biome Bioplastics, the UK bioplastics business

·; Increased customer launches with international customers

·; New product launches attract interest and development partnerships in wider application areas

·; 92% growth in sales in Stanelco RF Technologies drives improved divisional profitability; order pipeline continues to build

 

 

Paul Mines, Chief Executive said:

 

"We are delighted to be reporting another improved set of results for the Group, as we continue to make progress in reducing losses and growing sales, and expanding our product offering. In particular, we are pleased with the ongoing growth and development of our wholly owned bioplastic business, Biome Bioplastics, in both Europe and North America. Post period end, we completed our re-branding to Biome Technologies plc and the move to the Alternative Investment Market."

 

John Standen, Non-Executive Chairman said:

 

"Our two divisions' sales grew substantially in the first half: Bioplastics, on a like for like basis, by 34% and Stanelco RF Technologies by 92%. We are well placed to continue delivering on our strategy in the second half and are confident in the outlook for the full year."

 

 

- Ends -

 

For further information please contact:

 

Paul Mines, Chief Executive Sue Bygrave, Group Finance Director Biome Technologies plc	Tel: +44 (0) 2380 867100
Jonathon Brill/Caroline Stewart Financial Dynamics	Tel: +44 (0) 20 7831 3113
Shaun Dobson/James Maxwell Singer Capital Markets	Tel: +44 (0) 20 3205 7500

 

 

 

 

 

Notes to Editors

 

Biome Technologies plc is an AIM listed, growth oriented, commercially driven technology group. The Group is split into two divisions: Bioplastics and Stanelco RF Technologies.

 

The Group's primary activity is the development of its fast growing business in bioplastics. It is a leading innovator and supplier of biodegradable natural polymers that replace and enhance products made from oil based materials. The Group's strategy is founded on building market leading positions based on patented technology, serving international customers in valuable market sectors.

 

The Group is engaged with a variety of large-scale international customers and partners on a number of key commercial and development partnerships.

 

To find out more please visit www.biometechnologiesplc.com.

 

 

Chairman's Statement

 

We are very encouraged by the Group's performance in the first half of this year, with 40% growth in Group revenues on a like-for-like basis and 53% growth in sales in the UK bioplastics business.

 

Revenue growth in the first half of the year was ahead of market expectations in both our divisions and clearly demonstrates that there are significant market opportunities for our products.

 

Completion of a successful equity fundraising in June contributed to a closing cash balance of £4.7m at the end of June and we continue to believe this will provide us with the funding required to drive the Group towards profitability. Renaming the Company as Biome Technologies plc and moving onto the AIM market of the London Stock Exchange post period end in July has also now helped position the Group for its next stage of growth.

 

 

Group Results

 

Before addressing the results of the period it is worth noting that, as explained in previous announcements, the casting vote that we had over certain matters in our 50:50 joint venture company, Biotec, expired on 31 December 2009, and from 1 January 2010 we are no longer able to treat this operation as a subsidiary. Instead proportional consolidation has been used, with only 50 percent of Biotec's results and balances being included in the Group results rather than 100 per cent. Where "like-for-like" comparatives are quoted in these financial statements, these have been derived from restating the 2009 results on the same basis.

 

On a like-for-like basis, Group revenues increased from £4.8m to £6.7m. On a reported basis, Group revenues reduced from £8.1m to £6.7m in the six months ended 30 June 2010, reflecting the change in accounting treatment of Biotec described above. Bioplastic division's revenues grew by 34% on a like-for-like basis and the RF division's revenues by 92%.

 

The Group's loss from operations for the six months ended 30 June 2010 reduced to £1.2m from £1.5m in the same period last year. Improvements in profitability were recorded in both divisions and there were also reductions in central costs. The reductions in costs outlined in the recent fundraising have been made post period end and will give a cash saving of approximately £150,000 in the second half of the year.

 

Finance related costs, including foreign exchange losses, totalled £0.6m for the six months ended 30 June 2010 compared with £1.2m in the six months ended 30 June 2009. These costs included a £0.6m (2009: £0.9m) loss relating to the retranslation of an intercompany loan between Biome Technologies and Biotec.

 

The loss before taxation was £1.7m (2009: £2.7m), delivering a loss per share of 0.052 pence (2009: 0.081 pence).

 

Following the successful completion of a Firm Placing and Placing and Open Offer to shareholders in June 2010, which raised £3.5m (before £0.8m of expenses), the cash position at 30 June 2010 increased to £4.7m. Careful cash management during the six months ended 30 June 2010 reduced the cash utilised by operations to £0.7m (2009: £2.4m).

 

Despite the revenue growth in the period, like-for-like stock levels were lower at the end of June 2010 than in 2009 because of what we believe to be the short term disruption of one of our key supplier's plants following a routine shutdown. This plant is now operating again but not at full capacity and this may have some impact on second half performance. Further capacity is due to come on line early in 2011. This reduction in stocks benefitted cash-flow.

 

 

Bioplastics Division

 

Revenues in the Bioplastics Division increased from £4.3m to £5.8m on a like-for-like basis in the six months ended 30 June 2010, an increase of 34%. This reflected a 53% increase in sales in Biome Bioplastics to £1.5m and a 28% increase in Biotec.

 

Biome Bioplastics

 

In the period Biome Bioplastics has launched two new product ranges; one containing clear materials (BiomeClear) and the other containing materials with improved temperature stability (BiomeHT) which provide higher clarity and higher temperature performance than conventional bioplastic product. These products are opening up new market opportunities for the Group in a broader range of application sectors.

 

Exciting progress continues to be made on developing and launching new products in partnership with a number of large international customers. Some of these projects were outlined in our last IMS and a number of launches will be contributing to our growth in the second half of this year. A personal care products' producer has launched a new product, made from Biome Bioplastics materials, with a major USA retail chain and is now planning a European launch. The products are now found nationwide in the USA as an own brand in leading stores.

 

A market leading American supplier to the food processing market completed composting trials of Biome Bioplastics products with Cedar Grove and has launched a range of products based on our materials. This supplier should become another substantial customer over the coming months. This launch opens a new market area to the business and has already attracted the attention of a number of high profile corporates as end-users.

 

Full-scale trials are underway with a large multinational beverage and confectionery manufacturer into two main application areas, one of which, for secondary packaging, is expected to result in sizeable sales in the second half of this financial year (final product testing is now underway). The second application area, requiring modified atmosphere packaging, is expected to result in sales at a later stage.

 

Looking further into 2011, one of the world's largest suppliers of horticultural plastic products has now carried out a number of successful full-scale processing trials and field trials in a range of climatic locations, with our products. These trials have concluded positively and we would expect these to lead to commercial supplies of scale.

 

Also, two of the world's largest suppliers to the catering industry are evaluating the new BiomeHT range, which has higher temperature resistance than conventional bioplastics, for hot food and beverage use. The BiomeHT launch has also attracted interest from a broader range of suppliers to the personal electronics sectors and a new substantive project has been initiated.

 

We remain excited about the growth of our own direct sales and developing the opportunities now opening up to us.

 

Biotec

 

Biotec continues to manage the growing volumes of Biome Bioplastics and SPhere. Of particular note has been the growing number of new product scale-up and validation being managed by the unit within the normal production schedule. At the end of the period a new Managing Director for the unit was appointed (replacing the previous interim incumbent).

 

Biotec is a signature facility in the market and its scale and level of high quality invested plant continues to be an asset to the sales process with prospective customers.

 

Novamont S.p.A's proceedings against Biotec Biologische Naturverpackungen GmbH & Co KG, Germany ("Biotec") remain ongoing.

 

The first court judgement on this matter was received in France in April 2010 and was in favour of Biotec. Preparation and conduct of this court case in the first half meant that costs have been weighted within this period albeit full year costs are anticipated to be in line with expectations. Biotec continues to defend these claims robustly and Biome Technologies and Biotec continue to take professional and technical advice with regard to this litigation, and are confident of a successful outcome. The result of the first court hearing provides further clarity on this matter and we would hope that this will assist in finding commercial resolution in due course.

 

 

Stanelco RF Technologies Division

 

The Stanelco RF Technologies division has had a strong six months, delivering products against a strong order book for the year whilst continuing to build the order pipeline. Revenues in this division increased by 92% to £1.0m (2009: £0.5m) and it is growing net contributor to the cash position.

 

The fibre optic furnace portion of the business continues to be particularly robust with sales to Asia continuing to build. There have been a number of repeat orders from substantive customers who are re-vamping or expanding their production capability based on our technology. This is encouraging for both future sales and service/parts support.

 

With a near doubling of revenue over 2009 levels, it has been particularly pleasing to see how our manufacturing team have responded so well to this heightened level of activity. Quality control and on time delivery performance has been maintained alongside this growth.

 

 

Outlook

 

We are particularly encouraged to see the developing levels of demand in the bioplastics market and the interest in Biome's growing portfolio of materials.

 

We have been working closely with a number of large US companies over the past 18 months and it is encouraging to see substantial results emerging from our investments in these projects. It is also notable that other players are making substantive investments in this exciting and developing market. For example, BASF's new 60kt production facility for a bioplastics precursor (first announced in April 2008 for start-up in the third quarter of 2010) is now expected to begin production at year end; thereby removing a constraint to more rapid market growth.

 

Biome Bioplastics continues to develop its wholly owned IP and product range and we expect to see improving performance into 2011. New international customers are expected to make further launches based on our unique materials and we are excited by the revenue and developing market positioning that this will bring.

 

Stanelco RF Technologies continues to improve its sales performance in the fibre optic space and in a broader suite of products. The division is expected to provide a growing level of cash contribution to the Group.

 

We are well placed to continue delivering on our strategy in the second half and are confident in the outlook for the full year.

 

 

John Standen

Chairman

 

 

 

CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME
For the period ended 30 June 2010
		6 Months	6 Months	Year
		ended	ended	ended
		30 June	30 June	31 December
		2010	2009	2009
		Unaudited	Unaudited	Audited
	Note	£'000	£'000	£'000
REVENUE	4a - 4c	6,732	8,058	17,911
Cost of sales		(5,489)	(6,135)	(14,263)
GROSS PROFIT		1,243	1,923	3,648
Recurring administrative expenses		(2,405)	(3,397)	(6,251)
LOSS FROM OPERATIONS	4a - 4c	(1,162)	(1,474)	(2,603)
Investment revenue		23	25	33
Finance charges		(36)	(87)	(167)
Foreign exchange loss		(569)	(1,142)	(815)
LOSS BEFORE TAXATION		(1,744)	(2,678)	(3,552)
Taxation		(2)	(3)	100
LOSS FOR THE PERIOD		(1,746)	(2,681)	(3,452)
Other comprehensive income:
Exchange differences on translating
foreign operations		(340)	(828)	(562)
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD		(2,086)	(3,509)	(4,014)
Loss for the period attributable to:
Equity holders of the parent		(1,746)	(2,504)	(3,195)
Minority interest		-	(177)	(257)
LOSS FOR THE PERIOD		(1,746)	(2,681)	(3,452)
Total comprehensive income for the period attributable to:
Equity holders of the parent		(2,086)	(2,847)	(3,415)
Minority interest		-	(662)	(599)
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD		(2,086)	(3,509)	(4,014)
Basic and diluted loss per share - pence	6	(0.052)	(0.081)	(0.104)

 

CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
As at 30 June 2010
		At	At	At
		30 June	30 June	31 December
		2010	2009	2009
		Unaudited	Unaudited	Audited
	Note	£'000	£'000	£'000
NON-CURRENT ASSETS
Goodwill	7	7,362	14,809	15,426
Other intangible assets	8	1,000	652	848
Property, plant and equipment	9	1,952	4,238	4,105
		10,314	19,699	20,379
CURRENT ASSETS
Inventories	10	872	4,245	2,558
Trade and other receivables	11	5,984	2,951	2,930
Cash and cash equivalents		4,713	3,439	3,219
		11,569	10,635	8,707
TOTAL ASSETS		21,883	30,334	29,086
CURRENT LIABILITIES
Trade and other payables		2,237	3,296	2,303
Promissory notes	12	3,255	6,710	6,999
Obligations under finance lease		144	271	297
Short term provisions		-	-	-
		5,636	10,277	9,599
NON-CURRENT LIABILITIES
Obligations under finance lease		170	653	529
TOTAL LIABILITIES		5,806	10,930	10,128
NET ASSETS		16,077	19,404	18,958
EQUITY
Share capital	13	5,885	3,078	3,078
Share premium account		38,623	38,623	38,623
Share options reserve		676	552	611
Translation reserve		885	1,102	1,225
Retained losses		(29,972)	(27,421)	(28,112)
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT		16,097	15,934	15,425
Minority interest		(20)	3,470	3,533
TOTAL EQUITY		16,077	19,404	18,958

 

The interim statements were approved by the Board on 26 August 2010.

 

Signed on behalf of the Board of Directors

 

Paul R Mines (Chief Executive)

Susan J Bygrave (Group Finance Director)

26 August 2010

 

CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
As at 30 June 2010
	Share capital	Share premium account	Share options reserve	Translation reserves	Retained losses	Attributable to equity holders of the parent	Minority interest	TOTAL EQUITY
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Unaudited
Balance at 1 January 2010	3,078	38,623	611	1,225	(28,112)	15,425	3,533	18,958
Share options charges in period	-	-	65	-	-	65	-	65
Issue of share capital	2,807	-	-	-	(114)	2,693	-	2,693
Transactions with owners	2,807	-	65	-	(114)	2,758	-	2,758
Loss for the period	-	-	-	-	(1,746)	(1,746)	-	(1,746)
Other comprehensive income:
Exchange differences on translation of foreign operations	-	-	-	(340)	-	(340)	-	(340)
Total comprehensive income for the period	-	-	-	(340)	(1,746)	(2,086)	-	(2,086)
Reclassification of Biotec as a Joint Venture	-	-	-	-	-	-	(3,553)	(3,553)
Balance 30 June 2010	5,885	38,623	676	885	(29,972)	16,097	(20)	16,077
Unaudited
Balance at 1 January 2009	3,078	38,623	494	1,445	(24,917)	18,723	4,132	22,855
Share options charges in period	-	-	58	-	-	58	-	58
Transactions with owners	-	-	58	-	-	58	-	58
Loss for the period	-	-	-	-	(2,504)	(2,504)	(177)	(2,681)
Other comprehensive income:
Exchange differences on translation of foreign operations	-	-	-	(343)	-	(343)	(485)	(828)
Total comprehensive income for the period	-	-	-	(343)	(2,504)	(2,847)	(662)	(3,509)
Balance 30 June 2009	3,078	38,623	552	1,102	(27,421)	15,934	3,470	19,404

 

 

 

Audited
Balance at 1 January 2009	3,078	38,623	494	1,445	(24,917)	18,723	4,132	22,855
Share options charges in period	-	-	117	-	-	117	-	117
Transactions with owners	-	-	117	-	-	117	-	117
Loss for the year	-	-	-	-	(3,195)	(3,195)	(257)	(3,452)
Other comprehensive income:
Exchange differences on translation of foreign operations	-	-	-	(220)	-	(220)	(342)	(562)
Total comprehensive income for the year	-	-	-	(220)	(3,195)	(3,415)	(599)	(4,014)
Balance 31 December 2009	3,078	38,623	611	1,225	(28,112)	15,425	3,533	18,958

 

 

CONSOLIDATED STATEMENT
OF CASH FLOWS
For the period ended 30 June 2010
	6 Months	6 Months	Year
	ended	ended	ended
	30 June	30 June	31 December
	2010	2009	2009
	Unaudited	Unaudited	Audited
	£'000	£'000	£'000
Loss from operations	(1,162)	(1,474)	(2,603)
Adjustment for:
Amortisation and impairment of intangible assets	29	36	78
Depreciation of property, plant and equipment	186	350	702
Share based payments	65	58	117
(Profit)/loss on disposal of property,plant and equipment	-	(2)	(2)
Foreign exchange	(81)	(93)	(88)
Operating cash flows before movement of working capital	(963)	(1,125)	(1,796)
Decrease/(increase) in inventories	508	(1,939)	(190)
Increase in receivables	(722)	(928)	(865)
Increase in payables	471	1,575	532
Cash utilised by operations	(706)	(2,417)	(2,319)
Corporation tax (paid)/received	(2)	-	100
Interest paid	(20)	(55)	(99)
Net cash outflow from operating activities	(728)	(2,472)	(2,318)
Cash flows from investing activities
Interest received	7	25	33
Cash disposed of on reclassification of Biotec as a Joint Venture	(138)	-	-
Proceeds on disposal of property, plant and equipment	-	2	2
Investment in intangible assets	(208)	(196)	(432)
Purchase of property, plant and equipment	(54)	(17)	(69)
Net cash used in investing activities	(393)	(186)	(466)
Financing activities
Repayment of obligations under finance lease	(67)	(126)	(270)
Proceeds from the issue of shares	2,693	-	-
Net cash from financing activities	2,626	349	(270)
Net increase/(decrease) in cash and cash equivalents	1,505	(2,784)	(3,054)
Cash and cash equivalents at beginning of period	3,219	6,381	6,381
Effect of foreign exchange rate changes	(11)	(158)	(108)
Cash and cash equivalents at end of period	4,713	3,439	3,219

 

 

NOTES TO THE INTERIM CONSOLIDATED FINANCAL STATEMENTS

For the period ended 30 June 2010

 

 

1. CORPORATE INFORMATION

The financial information for the year ended 31 December 2009 set out in this interim report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The Group's statutory financial statements for the year ended 31 December 2009 have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain statements under Section 498 of the Companies Act 2006. The auditor's report on those financial statements did, however, contain an emphasis of matter statement in respect of going concern as, although the directors had announced their intention to raise £3.5m before expenses from an issue of shares, the fund raising had not, at that stage, been completed and there were material uncertainties surrounding the other courses of action that would otherwise have had to have been taken which could have cast significant doubt over the Group and Company's ability to continue as a going concern. The fund raising was successfully completed on 15 June 2010. The interim results are unaudited. Biome Technologies plc is a public limited company incorporated and domiciled in England & Wales. The company's shares are publicly traded on the AIM market of the London Stock Exchange.

 

2. BASIS OF PREPARATION

These interim consolidated financial statements (the interim financial statements) are for the six months ended 30 June 2010. They have been prepared in accordance with IFRSs as adopted by the European Union and IAS 34 Interim Financial Reporting. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2009.

 

These interim financial statements have been prepared under the historical cost convention.

 

These interim financial statements have been prepared in accordance with the accounting policies adopted in the last annual financial statements for the year to 31 December 2009.

 

The accounting policies have been applied consistently throughout the Group for the purposes of preparation of the interim financial statements.

 

3. BASIS OF CONSOLIDATION

The Group interim financial statements consolidate the results of the Company and all of its subsidiary undertakings drawn up to 30 June 2010. Subsidiaries are entities over which the Group has the power to control the financial and operating policies so as to obtain benefits from its activities. The Group obtains and exercises control through voting rights. At 30 June 2010 the subsidiary undertakings were Stanelco RF Technologies Limited, InGel Technologies Limited, Biome Bioplastics Limited, Aquasol Limited and Stanelco Inc.

 

Biotec Holding GmbH ("Biotec"), Biotec Biologische Naturverpackungen GmbH & Co KG and Biotec Biologische Naturverpackungen Forschungs-und Entwicklungs GmbH were subsidiaries of the Company until 31 December 2009 as, although the Company's shareholding was only 50%, it was party to an agreement giving it a casting vote over all material decisions until that date. Biotec and its subsidiaries were, therefore, accounted for as subsidiaries of the Company on the basis of control until 31 December 2009. The casting vote expired on 31 December 2009 and from 1 January 2010 Biotec and its subsidiaries have, therefore, been accounted for as a 50:50 joint venture using the proportional consolidation method. This means that only 50% of the joint ventures assets and liabilities are included in the balance sheet at 30 June 2010 compared with 100% at 31 December 2009 and that only 50% of its revenues and expenses are included in the Group's consolidated statement of comprehensive income for the six months ended 30 June 2010 compared with 100% in 2009. No profit or loss on disposal has been recognised in the Group's consolidated statement of comprehensive income as a result of the expiry of the casting vote as the Board considers that there has been no change in the fair value of the Group's share of the joint venture's assets and liabilities.

 

The assets and liabilities of the Biome Technologies plc Employee Benefit Trust ("EBT") are included within the consolidated statement of financial position on the basis that the Group has the ability to exercise control over the EBT.

 

4a. SEGMENTAL INFORMATION FOR 6 MONTHS ENDED 30 JUNE 2010

 

			Bioplastics		RF Technologies		Central Costs		Total
			6 Months		6 Months		6 Months		6 Months
			ended		ended		ended		ended
			30 June		30 June		30 June		30 June
			2010		2010		2010		2010
			£'000		£'000		£'000		£'000
Unaudited
Revenue from external customers			5,766		966		-		6,732
(LOSS)/PROFIT FROM OPERATIONS			(492)		162		(832)		(1,162)
Investment revenue									23
Finance charges									(36)
Foreign exchange loss									(569)
LOSS BEFORE TAXATION									(1,744)
TOTAL ASSETS			15,630		1,895		4,358		21,883

 

4b. SEGMENTAL INFORMATION FOR 6 MONTHS ENDED 30 JUNE 2009

 

			Bioplastics		RF Technologies		Central Costs		Total
			6 Months		6 Months		6 Months		6 Months
			ended		ended		ended		ended
			30 June		30 June		30 June		30 June
			2009		2009		2009		2009
			£'000		£'000		£'000		£'000
Unaudited
Revenue from external customers			7,554		504		-		8,058
(LOSS)/PROFIT FROM OPERATIONS			(530)		1		(945)		(1,474)
Investment revenue									25
Finance charges									(87)
Foreign exchange loss									(1,142)
LOSS BEFORE TAXATION									(2,678)
TOTAL ASSETS			25,672		1,515		3,147		30,334

 

 

4c. SEGMENTAL INFORMATION FOR YEAR ENDED 31 DECEMBER 2009

 

			Bioplastics		RF Technologies		Central Costs		Total
			Year		Year		Year		Year
			ended		ended		ended		ended
			31 Dec		31 Dec		31 Dec		31 Dec
			2009		2009		2009		2009
			£'000		£'000		£'000		£'000
Audited
Revenue from external customers			16,590		1,321		-		17,911
(LOSS)/PROFIT FROM OPERATIONS			(799)		40		(1,844)		(2,603)
Investment revenue									33
Finance charges									(167)
Foreign exchange loss									(815)
LOSS BEFORE TAXATION									(3,552)
TOTAL ASSETS			24,601		1,299		3,186		29,086

 

 

5. TAXATION

The Group's policy is to recognise tax credits resulting from tax R&D claims on a cash received basis. The claim in respect of the year ended 31 December 2009 has not yet been settled. A tax credit has not, therefore, been recognised in these accounts in respect of that claim.

 

6. EARNINGS PER SHARE

The calculation of earnings per share is based on the loss attributable to the equity holders of the parent for the six months of £1,746,000 (2009: £2,504,000) and a weighted average of 3,326,431,562 (2009: 3,078,340,917) ordinary shares in issue.

 

7. GOODWILL

The significant decrease in goodwill since 31 December 2009 results from consolidating only 50% of the goodwill in Biotec at 30 June 2010 and from the depreciation of the Euro during the reporting period.

 

8. OTHER INTANGIBLE ASSETS

Other intangible assets increased in the period as a result of the capitalisation of £208,000 of product development costs. The amortisation charge for the period was £29,000.

 

9. PROPERTY, PLANT AND EQUIPMENT

The significant decrease in property, plant and equipment during the reporting period results primarily from consolidating only 50% of the property, plant and equipment in Biotec at 30 June 2010 and from the depreciation of the Euro during the reporting period. £54,000 of property, plant and equipment was acquired in the period. The depreciation charge for the period was £186,000.

 

10. INVENTORIES

The significant decrease in inventories during the reporting period results from consolidating only 50% of the inventories in Biotec at 30 June 2010 and from the depreciation of the Euro during the reporting period. After adjusting for these factors, Group inventories reduced by £508,000.

 

 

11. TRADE AND OTHER RECEIVABLES

At 30 June 2010, trade and other receivables includes £3,271,000 in respect of a Euro denominated loan made to Biotec in the form of promissory notes. This amount is 50% of the full loan balance and represents the loan made to the 50% share of the joint venture owned by SPhere. Since this share of the joint venture is no longer consolidated the balance is no longer fully eliminated as it was at 31 December 2009. Interest is calculated at one per cent per annum on the outstanding loans. The promissory notes are repayable on demand. On this basis the notes are included on the balance sheet at the face value which is equivalent to fair value. During the period between 1 January 2010 and 30 June 2010 the depreciation of the Euro resulted in a reduction of £278,000 in the value of this balance.

 

12. PROMISSORY NOTES

Promissory notes are amounts due from Biotec and its subsidiaries to the 50 per cent shareholder, SPhere. From 1 January 2010 only 50% of these notes have been consolidated in the Group's accounts, reflecting just the Group's share of the liability. Amounts due represent the principal loans plus unpaid interest. Interest is calculated at one per cent per annum on the outstanding loans. The promissory notes are repayable on demand. On this basis the notes are included on the balance sheet at the face value which is equivalent to fair value. The promissory notes are not subject to interest rate risk as interest is fixed at 1%. During the period between 1 January 2010 and 30 June 2010 the depreciation of the Euro resulted in a reduction of £278,000 in the value of the Group's share of these promissory notes.

 

13. SHARE CAPITAL

 

On 15 June 2010, the Company completed a Firm Placing and Placing and Open Offer for its shares, issuing a further 2,806,525,416 shares to new and existing shareholders. This raised a total of £2,693,000 net of expenses of £816,000. As a result, share capital increased by £2,807,000, the nominal value of the shares issued. The expenses have been offset against the share premium of £702,000 on the shares issued, with the balance of £114,000 being added to retained losses.

 

14. CONTINGENT LIABILITIES

Novamont S.p.A's proceedings against Biotec Biologische Naturverpackungen GmbH & Co KG, Germany ("Biotec") remain ongoing.

 

The first court judgement in France was received in April 2010 and was in favour of Biotec. Biotec continues to defend these claims robustly and Biome Technologies and Biotec continue to take professional and technical advice with regard to this litigation and are confident of a successful outcome.

 

15. RISKS AND UNCERTAINTIES

The principal risks and uncertainties affecting the business activities of the Group are detailed in the Directors' Report which can be found on pages 13-17 of the Annual Report and Financial Statements for the year ended 31 December 2009 ("the Annual Report"). A copy of the Annual Report and

Financial Statements is available on the Company's website at www.biometechnologiesplc.com 

 

The risks affecting the business remain the same as in the Annual Report. In summary, these risks

include:

·; changes in the regulatory environments in which the Group operates

·; fluctuations in exchange rates, particularly Euro

·; volatility in raw material prices and supply

·; breach of intellectual property rights

·; competitors developing more attractive products

·; failure to commercialise products

·; financial risks including exchange rate risk, liquidity risk, interest rate risk and credit risk.

 

Further details of how these risks impact the business and how the directors attempt to mitigate

the risks can be found in the Annual Report.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

 

The directors confirm that to the best of their knowledge:

 

·; this condensed set of financial statements has been prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted by the European Union;

 

·; the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:

 

o An indication of important events that have occurred during the six months ended 30 June 2010 and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

 

o Material related party transactions in the six months ended 30 June 2010 and any material changes in the related party transactions described in the last annual report.

 

 

By order of the Board:

 

Paul R Mines (Chief Executive)

 

Susan J Bygrave (Group Finance Director)

 

26 August 2010

 

 

INDEPENDENT REVIEW REPORT FOR BIOME TECHNOLOGIES PLC

 

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2010 which comprises the consolidated statement of comprehensive income, consolidated statement of financial position, consolidated statement of changes in equity, consolidated statement of cash flows and the related notes 1 to 15. We have read the other information contained in the half yearly financial report which comprises only the Chairman's Statement and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with guidance contained in ISRE (UK and Ireland) 2410, 'Review of Interim Financial Information performed by the Independent Auditor of the Entity'. Our review work has been undertaken so that we might state to the company those matters we are required to state to them in a review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusion we have formed.

 

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors.

 

As disclosed in Note 2, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting,' as adopted by the European Union.

 

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

 

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2010 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union.

 

 

 

GRANT THORNTON UK LLP

AUDITOR

 

SOUTHAMPTON

26 August 2010

 

 

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