Biome Tech Regulatory News (BIOM)

29 March 2012

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

Preliminary Results

Biome Technologies plc announces its Preliminary Results for the year ended 31 December 2011.

Financial Highlights

·; Group revenue up 42% to £19.1m

·; Loss from operations reduced to £1.0m (2010: loss £1.9m), ahead of expectations

·; Loss before tax reduced to £1.1m (2010: loss £2.3m)

·; Closing Group cash position £2.4m

·; Two year debt facility of up to £2.0m agreed in May 2011 to support the continued growth of the Group

Business Highlights

·; 47% growth in Bioplastics Division revenue which includes:

- 82% growth in revenue made by Biome Bioplastics, the wholly owned UK headquartered bioplastics business

- 31% growth in Biotec's third party revenue

·; 21% growth in revenue in Stanelco RF Technologies with a new contract signed with Durapipe UK in January 2012

·; Bioplastics Division reaches annual breakeven for the first time and Stanelco RF Technologies improves profitability

·; Significant progress made in broadening the Group's customer base in both applications and geography

·; Board strengthened with the appointment of Declan Brown as Group Finance Director

Paul Mines, Chief Executive, said:

"2011 was a significant year for Biome, with the Group once again delivering growth across both operating divisions. Significant progress has been made in broadening the customer base across the Group, both in terms of applications and geography, which should provide a robust base for our growth moving forward.

Legislative changes and a growing acceptance of bioplastics as a viable replacement for oil based products means we remain excited about the future for the Group and are confident we can continue to grow market share in a growing market and build on the momentum seen in 2011."

John Standen, Non-Executive Chairman, said:

"Turnover rising by over 40%, almost halving our losses and thereby making substantial progress towards profitable growth, demonstrates that we are delivering real success in this exciting market and moving fast towards profitability. This is testament to the hard work and dedication of the whole Biome team and, in particular, the senior management led by Paul Mines".

- Ends -

For further information please contact:

Biome Technologies plc

Paul Mines, Chief Executive Officer

Declan Brown, Group Finance Director

www.biometechnologiesplc.com Tel: +44 (0) 2380 867 100

Daniel Stewart & Company plc

Daivd Hart

www.danielstewart.co.uk Tel: +44 (0) 20 7776 6550

First Columbus

Chris Crawford/Kelly Gardiner

www.first-columbus.com Tel: +44 (0) 20 3002 2070

FTI Consulting

Oliver Winters/Latika Shah Tel: +44 (0) 20 7831 3113

Chairman's Statement

2011 was another very encouraging year in our path towards building a sustainable business, with a 42% increase in Group revenues. Strong growth occurred in both of the Group's divisions with Bioplastics revenues growing by 47% and the Stanelco RF Technologies division increasing revenues by 21%.

The effect of this revenue growth and continued cost management was to reduce the year-on-year loss from operations by 46% from £1.9m to £1.0m, slightly ahead of expectations. This is the fifth consecutive year of reduced loss for the Group. It was particularly pleasing to see, at divisional level, both the Bioplastics division reach breakeven in a year for the first time and the Stanelco RF Technologies division improve its profitability levels over 2010.

The first half of the year saw revenue growth exceed the Board's expectations due to significant growth in Bioplastics and the continuation of a sizeable fibre optic furnace build programme within Stanelco RF Technologies. In the second half of the year, revenues in the Bioplastics division, predominantly third party sales at the Group's Biotec joint venture, were impacted by a "force majeure" at a key supplier. This restricted the Group's ability to build upon the growth achieved in the first half. This restraint has now eased and the Group is now holding contingency stocks of both raw materials and finished goods to mitigate the impact of such issues going forward.

While continental Europe remains the predominant market for the Group, significant progress was made in 2011 in broadening our customer base with new customers coming on stream in Asia and the Americas. New legislation and evidence of changes in consumer behaviour continues to help to drive our growth in a number of these countries.

The Stanelco RF Technologies division had another successful year with the Group continuing to benefit from its leading position in the fibre optic furnace market and an encouraging broadening into other industrial applications. The new contract with Durapipe UK, announced in January 2012, demonstrates Stanelco's technological capabilities and is expected to contribute significantly to the division's earnings over the coming years.

In December, it was pleasing to see the first payment of £348,000 of accrued interest from the Biotec JV. This initial return on investment demonstrates the operational gearing and prospective performance of a unit that remains with significant unutilised capacity.

The Group also made positive progress regarding its ongoing litigation involving Biotec, its joint venture partner SPhere and Novamont S.p.A. During the year SPhere has received two German court judgements that Novamont's patent EP '559 and EP '120 are invalid in this territory and Biotec is now engaged in a similar process with the goal to demonstrate that Novamont's patent EP '505 was invalid in Germany. The Board has sought and will continue to seek complete resolution of this matter as soon as it is feasible.

Results

Group revenues increased 42% to £19.1m (2010: £13.4m). The Bioplastics division's revenues grew by 47% to £16.2m (2010: £11.0m) and the RF division's revenues by 21% to £2.9m (2010: £2.4m).

The loss from operations for the year reduced to £1.0m (2010: £1.9m), reflecting revenue growth whilst administration costs were reduced slightly. The loss before taxation was £1.1m (2010: £2.3m), delivering a loss per share of 0.018 pence (2010: 0.047 pence).

Cash

We continue to manage our cash resources prudently whilst we move towards positive earnings and the Group's cash position at 31 December 2011 was £2.4m (2010: £4.0m). In the year, the cash utilised by operations was £1.1m (2010: £1.1m) of which £0.7m was invested in working capital as contingency against future supply side turbulence. In addition, £0.1m was invested during the year in new property, plant and equipment (2010: £0.2m) and £0.4m in product development (2010: £0.4m).

To support the anticipated future growth of the Group and to supplement our cash resources, a secured two-year debt facility of up to £2.0m was put in place in May 2011. This adds considerably to our financial resources and operational flexibility going forward.

Strategy

As stated previously, the Group's mid-term strategy is to:

a) build a leading position in its chosen markets based on patented technology;

b) develop a range of new functional application areas where premiums can be obtained from its existing bioplastics IP base;

c) create and build new bioplastic applications by working intimately with consumer facing international businesses; development will be application led rather than technology led; and

d) drive the businesses' differentiation by developing and retaining a team that is recognised as being at the forefront in developments in application and product engineering.

Biome Bioplastics achieved strong growth with a broadening set of customers across many geographic markets and a focus predominantly on patented products. We believe this growth exceeded that of the general bioplastics market resulting in increased market share. To further this growth going forward, Biome Bioplastics has launched a number of new products into a variety of applications. These products, which are being trialled and tested for their market potential, have been developed in-house by Biome Bioplastics and are consequently owned wholly by the Group.

Whilst we continue to work with a number of consumer facing international businesses, it is becoming clearer that the early adopters in this market will be regional players with quicker methods of trialling such products technically and commercially. Whilst growth in the European market has exceeded our expectations, the uptake in North America has been somewhat slower albeit it is now encouraging to see the Federal Administration taking steps to promote bio-content in its procurement policies.

On the raw material side we have reduced our dependence on a number of key additive suppliers through substitution and increasing the range of starch based material that can be used in our processes.

In Stanelco RF Technologies, we remain the leader in the optical fibre furnace market whilst expanding our product range and customer base, highlighted by the recently signed development contract with Durapipe UK to develop their plastic welding product.

The Board's firm intent remains to continue to accelerate revenue growth whilst controlling costs as it drives the Group towards profitability.

Board and Employees

In October 2011, Susan Bygrave stepped down as Group Finance Director and from the Board after two years of service. We thank her for her considerable contribution to the development of Biome Technologies and wish her well in her future endeavours.

Declan Brown replaced Susan as Group Finance Director and as a member of the Board. Declan has held senior finance positions within blue chip companies with international operations.

Our continued development and drive to profitability is due to the unerring support of our employees who have moved the business forward. Once again they have focussed on growing revenues as fast as possible on a limited budget and these efforts are very much appreciated. I thank them very much for their support.

Outlook

We remain excited by the opportunities that lie ahead for the business. The Group has been growing at a very fast pace over the last few years and, with changes in legislation and consumer behaviour continuing to support the global demand for bioplastics, we expect this momentum to continue into the future.

To date, we have not been impacted adversely, as many other businesses have, by the economic doldrums that are prevalent across the globe. However, as Continental Europe remains the main area for the Group's customers, the Board remains vigilant of the wider economic uncertainties that could impact the Company in 2012 and beyond. Against this backdrop, the Group has been expanding successfully its customer base in both divisions outside Europe.

As we look into 2012 we have to recall that the first quarter turnover in 2011 was the highest of that year. This year's trading with revenues of £2.9m for the first two months (2010: £3.4m) is showing that, whilst we are unlikely to reach 2011 levels in this quarter, we are already seeing monthly revenues comfortably above the levels of the final quarter of last year. We envisage this year's sales in both divisions growing through the year.

To maintain our pace in 2012 will require us to continue to enter new markets, gain market share and achieve further sales for our Biome developed products. At this early stage in the year, we are confident of achieving all of these.

John Standen

Chairman

Chief Executive's Statement

Performance

2011 was an exciting year for the Group with fast growing revenues and reducing losses. It has been especially encouraging to see that the continuing operational progress being made in both businesses is translating into improved financial results.

Significant progress has been made in broadening the customer base across the Group, both in terms of applications and geography, which should provide a robust base for our growth moving forward. We have a growing list of long term customers who continue to support our move into new markets.

There were, of course, a number of challenges in the year with regard to both managing this level of growth and a supply chain that was disrupted by both supply availability and pricing (particularly as currencies have fluctuated during the Euro-zone crisis). It was encouraging to see our growing team respond to and overcome these challenges and I thank them for their ongoing support.

Operational Review

Bioplastics Division

Revenues in the Bioplastics division increased by 47% to £16.2m, an increase of £5.2m above 2010 levels. This growth was derived from a pleasing mix of both new and existing customers in a variety of different applications.

Encouragingly, the division reached breakeven for the first time. With the utilisation of capacity at Biotec of around 50% for the period, this is a good demonstration of how increasing volumes can improve profitability.

Markets

Globally, some 300m tonnes of oil-based plastics are produced and used each year. This uses around four percent of global oil production. Each kilogramme of oil-based plastic typically requires 20 kilowatt hours of energy to manufacture, more than the amount needed to make the same weight of steel. There is an increasing trend for consumers and industry to seek materials that are sustainable and require less energy in their production. This provides an opportunity for bio-based bioplastics.

Whilst oil based plastics are prized for their durability, light weight and long life, it is these very factors that make them one of the environmental threats of the modern world. Most of the oil based plastics produced over the last 50 years remain in land-fill or present in the environment. Compostable bioplastics, such as those produced by Biome Bioplastics, have a role to play in reducing this blight.

The increased growth rate of Biome Bioplastics, and the bioplastic market more broadly in 2011, appears to be driven by a number of specific factors which are expected to continue to drive growth in 2012:

·; legislation with regard to plastic products and waste disposal in Europe

·; a pick-up in interest in bio-based/biodegradable products in the Americas and Asia

·; price rises and volatility in competing oil based materials

·; the improved functionality of bioplastics (such as the BiomeHT heat stable range of materials)

·; growing awareness of bio-based options for brand owners

The market prospects for Biome Bioplastics are encouraging and the business intends to continue to build its product and customer portfolio.

Raw Materials

The management of raw material inputs is an increasingly important part of the Group's strategy as growth has accelerated. Whilst long run crop prices have proved far more stable than oil prices, they do exhibit some volatility.

Whilst crop prices reached an all time real price high in February 2011 (as measured by the Food and Agricultural Organisation of the United Nations), pricing stabilised through 2011 and some downward movement is now being achieved. Biome Bioplastics continues to use a wide variety of natural inputs and made extensive use of reclaimed material streams in 2011. The business is continuing to broaden its supply base in 2012.

World oil prices have risen in early 2012 and whilst these can impact the business through higher energy costs and the cost of some additives, it does narrow the price differential between bioplastics and their petro-equivalents. Some of Biome's customers appear to choose bioplastics as a hedge against further oil related increases as well as for improved price/cost stability.

Technical Development

The UK based development team has had an exceptionally productive year, splitting its time between supporting trials at existing and new customers, re-formulating existing products to accept different raw material inputs and pushing forward new material development, often in collaboration with significant customers.

The business continues to have a development focus on cellulosic based materials that do not compete for land and water use explicitly with food-based crops and a number of new materials have been trialled in the year. The use of cellulose from managed forests reduces water and fertiliser inputs to such materials.

Underlining the care taken in new product development, an audit in 2011 by BM Trada at the UK development facility saw Biome Bioplastic's Quality Management System accredited to ISO 9001:2008 and its Environmental Management System to ISO 14001:2004.

The technical team has begun to review the opportunities offered by the use of fermentation technology in the manufacture of bio-based materials. It is expected that more work will be undertaken in this area in the coming years.

The majority of the Group's £0.4m investment in product development in the year took place in Biome Bioplastics (2010: £0.4m).

Commercial Activity

The majority of Biome Bioplastic's direct sales are managed by Biome's own sales network. However, in 2011 a number of new agents and distributors were used to access new markets. It is expected that further use will be made of this network as the business grows.

The commercial resources are split between supporting and developing the regionally positioned businesses/brands that are the early adopters in this marketplace whilst also pursuing longer term development opportunities with multi-national groups. It remains clear that the differential pricing of bioplastics remains an obstacle to widespread adoption by some multi-national groups.

Expenses

The management team continued to focus on and seek opportunities to reduce or eliminate cost in the year. Total expenses decreased in 2011 by £0.1m despite the 42% increase in activity levels.

Costs in the UK continue to be impacted by the legacy building lease arrangement at Southampton. The Group leases three buildings at this headquarter location but only uses the smallest one. Whilst one of the unused buildings had a tenant for 2011, the other remained empty and it has proved difficult to find a new tenant in this economic environment. The management continues to be active in marketing this building to explore opportunities to reduce this exposure on both a temporary and permanent basis.

Biotec Production

Biotec, the Group's 50% owned joint venture, continues to cope readily with the growing volumes of Biome Bioplastics and Sphere. In 2011 the total production was around half of the unit's nameplate capacity providing significant upside potential without further capital. Of particular note has been the growing number of new product scale-up and validations being managed by the unit within the normal production schedule.

Analytical and trial work undertaken during 2011 has also indicated that Biotec's nameplate capacity of ~20kt can be increased by around 20% through extended working hours and minor capital investment. This gives the Group sufficient capacity for the foreseable future.

The Group's polymers are manufactured from significant quantities of renewable resources and we are always looking at ways to both improve their performance and to reduce their effect on the natural environment. From July 2011, the energy used at Biotec comes only from renewable energy installations. In a new agreement, this energy is provided by Energiehandelsgesellschaft West gmbH and is derived from hydroelectric power stations in Austria. This supply is fully accredited to TÜV-Criteria EE-02-05/01 and a certificate of compliance has been made available to our customers on request.

Biotec Litigation

The Board announced on 29 May 2007 that it was evaluating claims against Biotec's technology made by Novamont S.p.A ("Novamont"), an Italy based competitor. Subsequent updates have clarified that Novamont had brought proceedings against Biotec and SPhere, France, and certain group companies of SPhere claiming infringement of the French and Italian designations of Novamont's European Patent Numbers EP '505, EP '559 and EP '120. These actions were taken by Novamont in both the French court and in two courts in Italy (Milan and Turin).

The first court judgment on this matter was received in France in April 2010 and was in favour of Biotec in that no proof of infringement was found for all three Novamont patents (above) and certain claims of EP '120 were found to be invalid. Various appeal paths in the French court are available to all parties. The cases in Milan and Turin are ongoing.

In 2011 Biome and its JV partner, SPhere, sought to emphasise the broader validity of Biotec's position. To this end, following proceedings, SPhere has now received two German court judgements that Novamont's patent EP '559 and EP '120 are invalid in this territory. Subsequently, Novamont has appealed the EP '559 decision and could appeal the EP '120 decision. Biotec is now engaged in a similar process with the goal to demonstrate that Novamont's patent EP '505 was invalid in Germany, prior to its expiry in January 2009. In the context of this process, Novamont declared in a legally binding way that it will refrain from claiming any damages from Biotec in connection with the German part of patent EP '505.

Biome and Biotec continue to take professional and technical advice with regard to this litigation. The Board has sought and will continue to seek complete resolution of this matter as soon as it is feasible.

Competition in Bioplastic Materials

The bioplastic market is an attractive market space with high levels of growth, significant potential for scale, a limited number of competitors, and patents providing protection to many of the new materials being promoted.

The last year has seen a range of competitive activity with some players struggling to adjust to rising volumes, some new entrants seeking to exploit the opportunity and others consolidating their positions.

The Board considers the Bioplastics Division to be in an excellent position for this competitive race with a low-cost production facility, a strong set of capable products and good intellectual property protection. The business remains active in developing and reinforcing all aspects of its competitive position and will be robust in ensuring that its intellectual property is not being infringed.

Stanelco RF Technologies Division

Stanelco RF Technologies is a growing specialist engineering business focused on the design and manufacture of electrical/electronic systems based on advanced radio frequency technology.

The business has successfully built on the solid growth of recent years with 2011 revenues increasing by 21% to £2.9m (2010: £2.4m). Continued focus on cost controls and manufacturing efficiencies delivered an operating profit of £585,000 (2010: £413,000).

The business continues to focus on four key revenue streams:

Optical Fibre Furnace Systems

Stanelco RF Technologies is a world leader in the design and manufacture of induction furnace systems used in the manufacture and processing of quartz glass "preforms" to produce optical fibre. Operating at temperatures up to 2500C, a typical system consists of an induction furnace, electrical power generator and control system, all designed and manufactured in-house. 17 of such furnaces were sold by the Division in 2011 (2010: 21) and it is believed that this is a significant proportion of all such sales globally.

Plastic Welding Equipment

In addition to a family of standard products, the business is increasingly providing bespoke equipment to applications requiring high integrity sealing. Hand-held, mobile and fully automated static solutions are provided to a multitude of end-user applications including nuclear, medical and industrial applications.

Induction Heating Equipment

During 2011 the business launched a new family of equipment capable of providing rapid, highly controlled heating solutions to a wide range of industrial applications. Materials of widely ranging composition and size can be heated in a clean, fast and cost efficient way using both standard and bespoke solutions operating in the range from one to many hundreds of kilowatts.

Service and Spares

The business continues to support its large installed equipment base through the provision of maintenance support and specialist spares across the globe.

Global demand for optical fibre continues to rise driven by ongoing infrastructure expansion in developing countries and steadier telecom and internet network expansion in Western markets. This growth translates into continued steady demand for our induction furnace systems as our customers continue to invest in increasing manufacturing capacity. Additionally, there is an increasing trend of customers taking in-house the manufacture of quartz glass "preforms" which is creating a requirement for additional furnace systems for glass processing applications such as stretching, shaping and sintering. The division appears well placed to continue to capitalise on this demand.

Recent efforts to broaden the product offering into new induction heating applications has resulted in a number of successes for the business, most notably the previously reported development and supply contract with Durapipe UK, a leading pipe system manufacturer. Building on this success, early investigations are underway to explore opportunities in further new market areas such as melting and forging.

Financial review

The summary results for the Group are shown below. It should be noted that for both the financial year 2011 and the 2010 comparative, the Board has chosen to proportionally consolidate the results of Biotec rather than account for its shareholding using the equity method because Biotec's manufacturing facility is seen as an integral part of the Group's Bioplastics operation. As such 50% of Biotec's results and balances are stated below.

Revenues

Group revenues increased in the year from £13.4m to £19.1m driven by strong growth in both the Group's divisions.

In the Bioplastics division, revenues grew by 47%, with 82% growth in the UK Bioplastics business, Biome Bioplastics, and 31% growth in Biotec's third party revenues. Sales growth in third party revenues declined in the second half of the year due to the limited availability of a key raw material. This issue has now been addressed by the supplier.

In RF Technologies, revenues grew by 21% in 2011, bolstered once again by strong sales into the fibre optic market.

Operating profits/(losses)

The Group's loss from operations for the year reduced from £1.9m to £1.0m.

For the full year, the Bioplastics division broke even for the first time despite a £0.1m impairment in the goodwill associated with Aquasol and £0.1m legal costs associated with the Novamont claim. Strong growth in the first half of the year was impacted in the second half by material constraints. Whilst these constraints eased in the fourth quarter there remained some continuing market volatility.

The RF Division made a £0.6m profit in the year, compared with £0.4m in 2010 owing to an increase in revenues and tight cost control enabling an increase in the operating profit margin.

Central costs for the year were £1.6m compared to £1.5m in 2010, which reflects an increase in rates on the vacant property and tax advice with regard to the import of cheaper raw materials from the far east. As in 2010, the directors have waived their bonus entitlements for 2011.

Product development costs of £0.4m (2010: £0.4m) were capitalised in the year. Tax R&D claims resulted in a tax credit received in the year of £0.1m (2010: credit of £0.1m).

Finance related credits and charges, including foreign exchange gains and losses, totalled £0.2m for the year (2010: £0.3m). This included a £0.1m loss (2010: £0.3m) relating to the retranslation of intercompany balances.

The Group's loss before tax for the year was £1.1m (2010: loss before tax of £2.3m), giving a loss per share of 0.018p (2010: loss per share of 0.047p).

Cashflow

The cash utilised from operations before working capital movements was £0.4m (2010: £1.3m) reflecting the reduced loss from operations during 2011 compared to the prior period. In addition, the planned increase in inventories of both raw materials and finished goods utilised a further £0.7m of working capital. There was, therefore, an adverse swing in working capital of £0.9m compared to the previous year. As a result, the cash utilised by operations during 2011 was £1.1m (2010: £1.1m).

The increase in inventories, within both Biotec and Biome Bioplastics, is designed to ensure that any further supply issues with the raw materials can be mitigated and restrict future impacts on our customers and revenues.

£0.1m was invested in the year in new property, plant and equipment (2010: £0.2m) and £0.4m in product development (2010: £0.4m).

Before financing activities, the cash outflow for the year was £1.3m, a reduction of £0.5m compared with 2010.

The closing cash position was £2.4m (2010: £4.0m) reflecting the performance described above.

Going concern

The directors have reviewed forecasts and budgets for the coming year which have been drawn up with appropriate regard for the current macroeconomic environment and the particular circumstances in which the Group operates. These were prepared with reference to historic and current industry knowledge, taking future growth into account. As a result of this process, at the time of approving the financial statements, the directors consider that the Company and the Group have sufficient resources to continue in operational existence for the foreseeable future and, accordingly, that it is appropriate to adopt the going concern basis in the preparation of the financial statements. As with all business forecasts, no guarantee can be given that the going concern basis will remain appropriate, given the inherent uncertainty about future events.

Key performance indicators (KPIs)

The Board is focussed on a number of KPIs that are used to measure performance. The Group's performance against these metrics for 2011 was as follows:

Paul Mines

Chief Executive Officer

The financial statements were approved by the Board on 28 March 2012.

Signed on behalf of the Board of Directors

Paul R Mines (Chief Executive)

Declan L Brown (Group Finance Director)

28 March 2012

NOTES TO THE CONSOLIDATED FINANCAL STATEMENTS

For the year ended 31 December 2011

1. NON-STATUTORY FINANCIAL STATEMENTS

The financial information set out in this preliminary results announcement does not constitute the Group's statutory financial statements for the year ended 31 December 2011 or 2010 but is derived from those financial statements. Statutory financial statements for 2010 have been delivered to the Registrar of Companies. Those for 2011 will be delivered following the Company's Annual General Meeting, which will be convened on 25 April 2012. The auditors have reported on those accounts: their reports on those financial statements were unqualified and did not contain statements under Section 498 of the Companies Act 2006.

The financial statements, and this preliminary statement, of the Group for the year ended 31 December 2011 were authorised for issue by the Board of Directors on 28 March 2012 and the balance sheet was signed on behalf of the Board by Paul R Mines and Declan L Brown.

2. BASIS OF PREPARATION

The Group's financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the EU.

3. BASIS OF CONSOLIDATION

The Group financial statements consolidate the results of the Company and all of its subsidiary undertakings drawn up to 31 December 2011. 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 31 December 2011 the subsidiary undertakings were Biome Bioplastics Limited, Stanelco RF Technologies Limited, Aquasol Limited, and InGel Technologies Limited (dormant).

Biotec Holding GmbH ("Biotec"), Biotec Biologische Naturverpackungen GmbH & Co KG and Biotec Biologische Naturverpackungen Forschungs-und Entwicklungs GmbH are 50% owned by the Company. Biotec and its subsidiaries were, therefore, 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 and that only 50% of its revenues and expenses are included in the Group's consolidated statement of comprehensive income for the year.

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 YEAR ENDED 31 DECEMBER 2011

4b. SEGMENTAL INFORMATION FOR YEAR ENDED 31 DECEMBER 2010

The Bioplastics division comprises of Biome Bioplastics Limited, Aquasol Limited and the Group's interest in its joint venture, Biotec.

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 2010 has now been settled. A tax credit has, therefore, been recognised in the Group's financial statements 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 twelve months of £1,052,000 (2010: £2,189,000) and a weighted average of 5,884,866,333 (2010: 4,616,163,063) ordinary shares in issue.

7. GOODWILL

The decrease in goodwill since 31 December 2010 is due to foreign exchange movements and to a £125,000 impairment in the goodwill in respect of Aquasol.

8. OTHER INTANGIBLE ASSETS

Other intangible assets increased in the year as a result of the capitalisation of £357,000 of product development costs (2010: £391,000). The amortisation charge for the year was £147,000 (2010: £76,000).

9. PROPERTY, PLANT AND EQUIPMENT

£122,000 of property, plant and equipment was acquired in the year (2010: £152,000). The depreciation charge for the year was £381,000 (2010: £372,000).

10. INVENTORIES

The 31 December 2010 inventories were unusually low at just £708,000 due primarily to a short term raw material supply issue which meant that finished stocks in the Bioplastics division were unusually low at the year end. This supply issue was resolved over the course of 2011 and resulted in the 31 December 2011 inventories being £2,055,000 higher at £2,763,000.

11. TRADE AND OTHER RECEIVABLES

At 31 December 2011, trade and other receivables includes £2,698,000 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. Interest is calculated at one per cent per annum on the outstanding loans. The promissory notes are repayable on one months' notice. On this basis the notes are included on the balance sheet at the face value which is equivalent to fair value. During the year the £1,072,000 of the loan was exchanged for a contribution into the Biotec capital reserve and £348,000 was received in interest accrued up to 1st January 2011. The depreciation of the Euro also resulted in a reduction of £65,000 in the value of this balance.

12. PROMISSORY NOTES PAYABLE

Promissory notes are amounts due from Biotec and its subsidiaries to the 50 per cent shareholder, SPhere. 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 one months' notice. 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 year SPhere exchanged £1,072,000 of the loan for a contribution into the Biotec capital reserve and £348,000 was paid in interest accrued up to 1st January 2011. The depreciation of the Euro resulted in a reduction of £65,000 in the value of the Group's share of these promissory notes.

13. SHARE CAPITAL

The number of shares issued in the Company remained flat throughout the year ended 31 December 2011 at 5,884,866,333.

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. Further action by either party by way of appeal remains possible although no appeal has yet been lodged.

The cases in Milan and Turin continue and court decisions here may be expected within twelve months.

Biome and Biotec continue to take professional and technical advice with regard to this litigation and are confident of further successful court outcomes. The Board has sought and will continue to seek the complete resolution of this matter as soon as possible.