Biome Technologies plc (LON:BIOM) Chief Executive Officer Paul Mines caught up with DirectorsTalk for an exclusive interview to discuss the recent fundraise, what the proceeds will be used for, revenue potential and pipeline for Bioplastics.
Q1: Now, alongside your interim results, you’ve announced a £1.1 million fundraise. Paul, can you tell us why the need for this raise?
A1: Our Bioplastics division has now become the major revenue driver for the group and, notwithstanding the issues from the pandemic and lockdown, it produced revenue growth of 71% in the first half, and we think there’s a lot of further growth potential there. This fundraise enables us to support the momentum of bioplastics and really drive it forward.
Q2: Can you just expand for us on the revenue potential?
A2: I guess this is really driven by a backdrop around of consumer concern around plastic pollution, climate change, and both brands and the public at large have really recognised the damage that non degradable oil-based plastics are causing to the environment. That’s really driving a change in demand for our products, which are novel plant-based compostable polymers which provide solutions to these environmental problems, particularly where packaging is contaminated with food.
We’ve built a portfolio of core customers, including a large section of the US take-home coffee pod market and we’ve got the opportunity to expand that customer base and our product range over the next coming years.
Q3: You mentioned the US, is that your main market and are you producing your own products there?
A3: So, for bioplastics certainly the US is our main market, with some 80% of our revenues generated there. It’s been much faster to move compared to the European market and we manufacture there through contract outsource manufacture, selecting the most efficient producers which gives us great flexibility and reduces the need for heavy capital expenditure. So, we have manufacturing now in the US but we also manufacture in Europe and the UK.
Q4: Now, you raised £1.3 million through a place and a year ago, and I suspect investors are probably asking should we not be surprised if you raised a further funding in 2021 or 2022?
A4: Well, we’re certainly not expecting any more in 2022 but when we raised money last year, we didn’t anticipate this round of funding.
In contrast to the growth in our Bioplastics division, our other division, which is called Stanelco RF Technologies and produces radio frequency induction furnaces for the fibre-optic market, has really faced a number of headwinds, both due to overcapacity in its market and COVID-1. Sadly, revenues in this division are down significantly this year.
We have imposed really tight cost controls, including the directors taking voluntary cuts in renumeration, we’ve accessed the UK government furlough scheme but the cash flow from this division is not there at the moment to support the high growth levels in the Bioplastics division.
So, the Stanelco FC Technologies division has got great longer term prospects because the very fact that we’re using zoom and teams more these days will drive more fibre-optic demand and demand for our products for that market. But in the shorter term, that demand is not going to return, we see that as a long term play in that market now.
Q5: What does the pipeline of new products for the Bioplastics division look like?
A5: We’re an avid investor in technology that really drives our new product pipeline and we worked and spent something over £6 million now with leading university to develop novel polymers. Our focus for the near term is the specialist packaging segment as well as coffee filtration and coffee pods, this is where we really see the growth in the next year or two.
Q6: Thanks for sharing those results Paul, and the reasons obviously for the placing. Is there anything else that you’d like to share with us before we go?
A6: Thank you for having me on today.
I think I just want to reiterate this successful fundraise will enable us to pursue a great window of opportunity around bioplastics to build on that 71% revenue growth in a fast growing market with high performance barriers to entry and attractive margins.
We’re already delivering our products to some great existing customers and this gives us the opportunity to expand this customer base and grow the product range.
We’ve got a highly motivated team, passionate about growing a business in this space and I think this fundraise gives us real some fuel in the tank and we’re really looking forward to the future with excitement and confidence.