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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Stanelco | LSE:SEO | London | Ordinary Share | GB0005814198 | ORD 0.1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.12 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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RNS Number : 0049L
Stanelco PLC
29 April 2010
29 April 2010
Stanelco plc ("Stanelco", "the Company" or "the Group")
Preliminary Results
Stanelco Plc announces its Preliminary Results for the year ended 31 December
2009.
Financial Highlights
· Group revenue up 21% to GBP17.9m (2008: GBP14.8m), ahead of market
expectations
· Loss from operations reduced to GBP2.6m (2008: loss GBP2.8m), despite
GBP0.7m of additional legal costs incurred in Biotec in defending the Novamont
S.p.A legal action
· Loss from operations before share option charges reduced to GBP2.5m
(2008: loss GBP3.2m)
· Loss before tax increased to GBP3.6m (2008: loss GBP0.5m) after partial
reversal of foreign exchange gain on intercompany loan
· Closing Group cash position GBP3.2m (2008: GBP6.4m), with GBP0.5m cash
absorbed into working capital to support growth
· Central costs before share option charges reduced to GBP1.7m (2008:
GBP2.3m)
· Planned equity fund raising to raise up to GBP3.5m to fund ongoing
working capital requirements and Group development
Business Highlights
· 23% growth in BioPlastics Division sales, including 30% growth in sales
made by the UK bioplastics business, Biome Bioplastics
· BioPlastics profit from operations GBP0.5m before Biotec legal costs
(2008: loss GBP0.2m)
· 23% growth in sales in RF Applications Division
· RF Applications Division now profitable with very strong order pipeline
· New bioplastics products launched in early 2010 broaden range of end-use
applications for Biome Bioplastics
· French court issued favourable findings in April 2010 in relation to
patent infringement claims made by Novamont S.p.A.
· Development of bioplastics products with major international customers
accelerates
Planned Fundraising
· The Group is also seeking to raise up to GBP3.5 million (before expenses)
from a planned fundraising in May 2010, to be achieved through a placing and
open offer with the net proceeds being used:
- to support the continued development of the Group's bioplastics products
and bioplastics market position with a view to commercial and technical
leadership in this arena;
- to fund the Group's central overheads and listing costs until sufficient
scale has been reached; and
- to strengthen the Group's working capital position as it experiences
continued strong sales growth.
· The Board has already received non-binding indications of support
amounting to more than 60% of a minimum target of GBP2.7m
· The fundraising would be conditional upon, amongst other things,
shareholder approval.
· The Company anticipates making a further announcement, setting out the
detailed terms of the proposed fundraising, the preparations for which are well
advanced, next month.
John Standen, Non-Executive Chairman said:
"We are particularly pleased to be advancing strongly in our bioplastics
business, in line with our strategic objectives. We experienced significant
levels of growth across both of the Group's Divisions and are on a path towards
Group profitability.
"The Board is confident that there are exciting future opportunities that exist
in our markets and that we are well positioned to capitalise on them. To
enable us to continue to fund our ongoing working capital requirements and to
develop the Group we are seeking the support of shareholders for a fundraising
of up to GBP3.5m in May 2010."
Paul Mines, Chief Executive Officer said:
"2009 was another year of sales growth and reducing operating loss. The new
bioplastic product launches have been received positively by our customers and
the markets. Our strategy to build a leading bioplastics business, well founded
on good science, excellent applications engineering and deep relationships with
blue-chip clients is maturing and accelerating. I am delighted to see the level
of indicative support we have received already for the placing element of the
current fundraising."
- Ends -
For further information please contact:
+-----------------------------------+-------------------------+
| Paul Mines, Chief Executive, | Tel: +44 (0) 2380 |
| Stanelco plc | 867100 |
| Sue Bygrave, Group Finance | |
| Director, Stanelco plc | |
| | |
+-----------------------------------+-------------------------+
| Jonathon Brill/Caroline Stewart, | Tel: +44 (0) 20 7831 |
| Financial Dynamics | 3113 |
| | |
+-----------------------------------+-------------------------+
Chairman's Statement
Operationally, this has been a strong year for Stanelco despite the general
economic environment and more specific difficulties in the global plastics
markets. Revenue growth exceeded 20% in both of the Group's divisions, and in
the UK-based bioplastics business (rebranded Biome Bioplastics in January 2010)
revenue growth was 30%. These results support our strategy to develop
aggressively our bioplastics business by working closely with major customers to
provide products with the winning credentials of sustainability and
biodegradation.
It is particularly pleasing to see that the significant growth in revenues
enabled our BioPlastics Division to move into profit in 2009 (before the legal
costs associated with the Novamont S.p.A. ("Novamont") patent litigation). This
gives the Board encouragement that the underlying business model for our
materials is robust.
The Group's loss from operations also reduced. This improvement has come not
only from the gross profit improvement and from revenue growth but also a tight
focus on expenditure/cash that has seen central costs reduce by GBP0.6m (before
non-cash share option charges) and continuing improvement in the RF Applications
Division.
The Board believes that shareholders are best served by this strategy of driving
revenue growth and controlling costs with the aim of moving the Group towards
profitability. The commercial capability of the technology is emerging and we
have a team in place providing the innovative development of a broader range of
products that can accelerate value generation for the benefit of the business
and its shareholders.
Further funding is necessary in order to underpin and achieve this and the Board
has decided to proceed with the planned fundraising to ensure that the Group can
fulfill its potential.
Results
Group revenues increased by GBP3.1m to GBP17.9m in the year ended 31 December
2009, an increase of 21% compared with the previous year.
Biome Bioplastics increased its revenues by 30%, Biotec by 23% and RF
Applications by 23%.
Gross profit for the year increased from GBP2.8m to GBP3.6m and the gross margin
increased to 20% (2008: 19%).
The loss from operations for the year reduced to GBP2.6m (2008: GBP2.8m) despite
GBP0.7m of additional legal costs being incurred in Biotec in 2009 in defending
the Novamont legal action.
After foreign exchange losses and gains (mainly on inter-company loans), the
loss before taxation was GBP3.6m (2008: GBP0.5m), delivering a loss per share of
0.104 pence (2008: earnings per share 0.005 pence).
Our cash position at the year end was GBP3.2m, with a net cash outflow from
operating activities of GBP2.5m and some absorption of cash into working capital
as the business expanded (2008: GBP1.4m).
Strategy
Our Group strategy is to:
· build a clear market leading position based on patented technology;
· develop from existing IP base into in a range of new functional
application areas where premiums can be obtained;
· create and build bioplastic markets by working intimately with consumer
facing international business; such development to be application lead rather
than technology push; and
· drive the businesses' differentiation by developing and retaining a team
that is recognised as head and shoulders above the competition in application
and product engineering.
Our continuing development work seeks not only to enhance the functional
characteristics of its products but also to reduce the cost base of these
materials in order to improve margins generated. The Group intends to continue
to protect its existing intellectual property in a robust manner and will seek
to protect new developments through patents and confidentiality in an
appropriate way.
It is pleasing to note that the French court took the view earlier this month
that Biotec's original technology does not infringe Novamont's three patents and
indeed, whilst one of these patents has already expired, a second was found to
be partially invalid. This allows the Group to proceed with increased
confidence in the market. All efforts have, and will continue to be made, to
end this dispute as soon as possible if resolution in an equitable manner can be
achieved.
We have had supportive feedback from customers following the branding of our UK
bioplastics business as Biome Bioplastics and we will seek to develop this as a
leading bioplastics industrial brand. The Biotec joint venture will continue to
be optimised for supporting the manufacturing scale-up of existing and new
products.
We will continue to develop the RF Applications Division in-line with its
re-emergence as a small scale OEM engineering business. Opportunities will also
be sought to accelerate the business to a meaningful scale or to realise best
value for shareholders in other ways.
The Board has also examined all operational savings that can be made in order to
underline to shareholders our belief that the current development strategy is
working and will continue to do so. In support of our growth strategy the
Directors will reduce their remuneration packages during this period of cash
constraint by approximately 30% following successful completion of the
fundraising described below and make further staff cost reductions. These
savings will reduce the cash burn in respect of central costs by approximately
GBP0.3m per annum.
Planned Fundraising
The Board believes that this strategy will be the most viable way to build a
valuable and fast growing business. However, further funding will be required.
To continue to pursue the Group's intended strategy, the Company is seeking to
raise up to GBP3.5 million (before expenses) from the planned fundraising in May
2010, to be achieved through a placing and open offer. The net proceeds of the
fundraising will be used:
· to support the continued development of the Group's bioplastics products
and bioplastics market position with a view to commercial and technical
leadership in this arena;
· to fund the Group's central overheads and listing costs until sufficient
scale has been reached; and
· to strengthen the Group's working capital position as Group experiences
continued strong sales growth.
A minimum of GBP2.7 million will need to be raised for the fundraising to
proceed. Preparations for the proposed fundraising are well advanced and, as at
the date of this announcement, the Board already had non-binding indications of
support to subscribe for more than 60% of this amount, including 5% to be taken
up by the Directors and senior management of the Group. The Board considers
that raising GBP3.5m would allow it to better maximise the opportunities for
growth.
The placing and open offer will require a prospectus to be published by the
Company, which will set out the background to and the reasons for the planned
fundraising and its detailed terms. This document is expected to be published
by the middle of May and we expect the fundraising to be completed by early June
2010.
In the event that the fundraising does not conclude successfully, the Group will
be obliged to follow an alternate strategy that focuses principally on
conserving its cash resources whilst seeking to realise potential value through
an orderly disposal of the Group's assets. The Board anticipates that such a
strategy will almost certainly require a cessation of much of the Group's
current growth and development activity and a significant reduction in central
costs.
Going concern
As explained above, in order to continue to pursue the Group's intended
strategy, the Company is seeking to raise up to GBP3.5 million from an equity
fundraising. If this fundraising is not successful then the Board will be
obliged to follow the alternate strategy set out above. The Board considers
that ceasing certain of its activities and seeking an orderly disposal of the
Company's investments should generate sufficient cash to enable the Company and
the Group to meet operational requirements whilst the Board pursues alternatives
for realising shareholder value. However, successful disposal of the Group's
investments cannot be guaranteed nor can the swift liquidation of its working
capital or the continuing growth of the RF Applications Division if it becomes
more closely constrained in terms of cash.
The Board has concluded that the combination of these circumstances represents a
material uncertainty that casts significant doubt over the Company's ability to
continue as a going concern and that, therefore, the Company may be unable to
realise its assets and discharge its liabilities in the normal course of
business. Nevertheless, after making enquiries and considering the
uncertainties described above, the Board has a reasonable expectation that the
Company and the Group have adequate 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 Company and the Group's
financial statements.
Board and Employees
Our development path this year owes much to the support of our employees and
their passion for building a business around these technologies. I would like
to thank them for all their efforts for the Group. I believe we have strong
teams working throughout the business to continue the Group's progress.
Shareholder Meetings
It is anticipated that the formal announcement of the fundraising and the
publication of the prospectus will occur in May. Shareholder approval of the
placing and open offer will then be sought at a General Meeting of the Company
which will be convened approximately 17 days later.
To allow time for the fundraising to be considered fully and to complete, the
Board is proposing to delay this year's Annual General Meeting until late June
2010.
Current Trading
As reported in the Group's Interim Management Statement for the period 1 January
2010 to 28 April 2010 released today, Group revenues have continued to grow
strongly during the three months to 31 March 2010 and the Group's overall
trading performance remains in line with the Board's expectations.
Following the expiry of the rights attaching to the "Golden Share" which the
Company held in its 50/50 joint venture, Biotec, the Company will no longer
consolidate 100% of Biotec's results. The revenues and cash balances reported
below for 2010, therefore, include 50% of the figures reported by Biotec and the
prior year figures are reported on the same basis to allow a like-for-like
comparison.
Group revenues in the three months to 31 March 2010 increased from GBP2.1m to
GBP2.6m on a like-for-like basis (including 50% of Biotec's revenues), an
increase of 26% compared with the same period last year. This reflected a 76%
increase in bioplastic sales made by Biome Bioplastics, a 58% increase in sales
in RF Applications Division and a 7% increase in third party sales from our
joint venture, Biotec.
Our cash position at 31 March 2010 was GBP2.4m, including 50% of Biotec's cash
balance.
Outlook
The Board believes that it has demonstrated the potential for creating value for
shareholders by sustainable growth of the bioplastics business, and believes
there are substantial opportunities in its product and sales development
pipeline to accelerate this further in 2010 and beyond.
In 2009 we have delivered good top line growth and made significant progress
with product development leading to the launch of several new market leading
bioplastics. A focus on cost control and reduction has ensured that the effect
of this revenue has come through to bottom line improvement despite the
increased costs of defending the Biotec technology from the Novamont challenge.
This strong revenue growth has continued into 2010 and the Board is confident
that there are both exciting future opportunities exist in our market and that
we are well positioned to capitalise on them.
We now intend to seek support from our shareholders to enable us to fund the
accelerating development of the Group.
John Standen
Chairman
Chief Executive's Statement
Performance
The Stanelco team have delivered another year of revenue growth and reduced
operating loss; the third in a row. Although 2009 was a difficult year in the
global plastics markets, I am pleased that we have been able to keep the
BioPlastics and RF Applications Divisions both growing and improving their
margins during this period.
Operational Review
Stanelco BioPlastics
The BioPlastics business has continued to make further strong progress with
sales increased from GBP13.7m to GBP16.6m. Improvement in gross margin helped
to move the consolidated BioPlastics business to an underlying operating profit
of GBP0.5m before the Biotec legal costs of GBP1.3m. It is encouraging to see
this demonstration of the underlying commercial viability of the bioplastics
technology.
Stanelco's direct sales of bioplastics though Biome Bioplastics increased from
GBP1.8m in 2008 to GBP2.4m in 2009 as the commercial team built sales with both
existing and new customers. The majority of these sales remain on the original
products developed by Biotec and have been generated by working closely with
customers to realise their product concepts, deliver appropriate economics with
bioplastics and to scale-up their production processes.
As the year progressed, we were able to take some of the new products, developed
in Biome Bioplastics at the Southampton development centre, out into the market
to test their capability on full scale production lines. As confidence in their
performance has grown, this has led to commercial launches to broader markets in
early 2010.
Markets
Conventional, oil based plastics are ubiquitous - many were invented in the
early 20th century and they became part of everyday life from the 1950s onwards.
Now, they can be found throughout our homes and cars, in our workplaces and
leisure activities. They range from short life packaging products that are used
for a day and then discarded, through consumer durables and electronics to long
life physical infrastructure that endures for decades.
Oil based plastics have been so successful due to their low cost related to
their oil based origins and their ability to be processed rapidly in mass
production. Modern bioplastics, such as those now launched by Biome
Bioplastics, are now challenging the dominance of their "petro" cousins. These
bioplastics are being developed with the functional capability to substitute in
many existing plastic applications and allowing them to be transformed on the
existing infrastructure of conversion equipment.
Conventional wisdom regarding bioplastics sees them used in shopping bags,
short-life packaging and disposable items but this is changing as their
attributes are enhanced. Bioplastics can, but don't have to, decompose
rapidly. Advances in science allow them to perform their required uses for
decades if required.
Today's bioplastics are derived from sustainable plant sources, reducing their
exposure to oil price inflation. As the underlying biomass for bioplastics is
grown, CO2 is converted into the polymer structures that form these innovative
materials. This CO2 is held in the plastic's structure until it is released
through the materials eventual degradation that can range from months to decades
later. Consider it a form of "material" carbon sequestration that produces a
useful product.
A consensus about the rate of growth in the bioplastics market in 2009 has yet
to emerge, although the rate of growth was subdued in comparison with 2008. It
is encouraging that at a time when the oil-based plastics industry was subdued,
a number of the bioplastics industry players were reporting growth.
In 2009, the Group experienced increasing interest in its products due to their
renewable content. Whilst it remains important that in many applications our
products biodegrade or compost, we are now often asked to deliver materials with
a specified level of renewable content/new carbon.
There is also improving clarity that further substantial investment is being
made in pre-cursor materials for our bioplastics. This will ensure both that
our growth is not inhibited from scarcity of supply and the cost base of these
materials continues to reduce.
Technical Development
The Biome Bioplastics team at Southampton is working to improve the functional
properties of bioplastic materials in a number of carefully selected areas.
This work is more often undertaken with a lead customer for a given sector to
ensure the commercial viability of the product.
There was one addition to the team in the year as the pipeline of new products
was prepared. There has also been further minor investment at the Southampton
pilot/development unit during 2009. This has been focused on product testing
and small scale industrialisation equipment. This facility now has the
capability to manufacture small quantities of new bioplastics and to trial them
through several common industrial conversion processes.
The business continues to make use of both university and commercial laboratory
facilities, where appropriate. During the year we extended such collaborations
with a number of practical units in leading universities. It has been
encouraging to see their support for our development and their interest in our
new range of materials.
As the pipeline of new and novel materials from Biome Bioplastics has begun to
mature, the business has sought to protect this IP. The patent application
process has been initiated on a number of candidate compositions.
Commercial Activity
The commercial team built sales and developed relationships with a number of
important customers through the year.
Sales activity has been targeted at both the conversion area of the supply chain
as well as brand owners. Work with a number of blue chip customers now using or
evaluating Stanelco's bioplastics is ongoing and these relationships continue to
develop. These customers now include end-use applications in the horticulture,
electronics, stationery products, personal care, food service and the snack
markets.
Following the re-entry into the North American market in 2008, our sales office
in the USA has begun to build a number of interesting positions. A personal
care launch has taken place whilst other activity has included electronics and
horticulture.
The successful launch of the Biome Bioplastics brand took place in January 2010.
The re-branding has been well received by customers.
This commercial progress made in 2009 has continued and accelerated into the
first quarter of 2010 with Biome Bioplastics exhibiting 76% growth compared to
the same period in 2009.
In the first quarter of 2010 a number of notable projects that have been in
development for some time have moved towards substantive commercial scale:
· A producer of personal care products has begun a controlled launch of a
new product, made from Biome Bioplastics materials, with a major USA retail
chain and is now planning a European launch.
· A large multinational beverage and confectionery manufacturer has been
developing and evaluating a range of Biome materials for confectionery packaging
for two years. This company is committed to progressively introducing
sustainable materials into their product range. Full scale trials are underway
into two main application areas, one of which, for secondary packaging, is
expected to result in substantial sales in the second half of this financial
year. The second, requiring modified atmosphere packaging is expected to result
in further volumes from 2011, onwards.
· Having tested Biome resins on full-scale equipment a major American
supplier to the food processing market is keen to take the products to market.
Having already purchased initial quantities, anticipated success in composting
trials could result in this supplier becoming a substantial customer in the
second half of this year.
· One of the world's largest suppliers of horticultural plastic products,
this major producer carried out a number of successful full-scale processing
trials, of Biome blends, in 2009. Based on this success, they have since been
carrying out field trials in a range of climatic locations. The first set of
these trials is nearing completion and is said to be positive. Although some of
the trials will take several more months, larger sales are expected to begin in
the second half. By 2011, this could be another substantial customer.
· A European retail chain has been assessing making one of its high profile
products from Biome bioplastics. Several full scale production trials have been
completed and assessed by their convertor. We are now in commercial discussions
to firm up on prices and volumes for 2010.
· 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 products were
developed in association with these companies.
Production
Biotec manufactures biodegradable products from its base in Germany to support
the sales and manufacturing activities of Stanelco and SPhere, our joint venture
partner.
Previously, Stanelco held a casting vote over certain matters in the Biotec
Board (through a "Golden Share") albeit this has not been utilised since its
acquisition in 2005. This arrangement expired on 31 December 2009 and
shareholder control of Biotec with SPhere SA moved seamlessly to a clear 50/50
basis from 1 January 2010.
Biotec is a capable and modern automated facility that, although it remains
unproven by demand, may be able to flex up to 20,000 tonnes per annum in its
current footprint/configuration. The unit is now also being used to assist in
the industrialisation of products developed within Biome Bioplastics.
The Biotec team continued to work on cost minimisation and ensuring that quality
performance remained at a high level.
Expenses
There has been a continued focus on the eradication of waste and cost as part of
a continuous improvement programme. This has ranged across material and energy
efficiency to challenging our suppliers for better value. Rationalisation of our
central team and reduction in third party expenses has allowed central costs to
be reduced by GBP0.6m (before non-cash share option charges).
Biotec Litigation
Stanelco announced on 29 May 2007 that the Board was evaluating claims against
Biotec's technology made by Novamont (a competing bioplastics business).
Subsequent updates have clarified that Novamont had brought proceedings against
Biotec and SPhere and certain group companies of SPhere claiming infringement of
the French and Italian designations of Novamont's European Patent Numbers EP 0
327 505, EP 0 947 559 and EP 0 937 120. These actions were taken in the first
instance by Novamont in both the French court and in two courts in Italy (Milan
and Turin).
On 16 April 2010, the French Court notified Biotec of its favourable finding in
relation to the patent infringement claims made by Novamont. Some three years
after this case was launched, this is the first court finding on the merits of
this case, and validates Stanelco's decision to mount a robust defence of
Biotec's technology.
It should be noted that this French court finding does not affect the cases
(referred to above) being pursued in Italy and that these may be expected to
continue over the following months. Further action by the claimant, Novamont,
by way of appeal in the French court is also possible.
However, Stanelco 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 provided the outcome is equitable.
Stanelco RF Applications
RF Applications' sales increased by 23%, driving the unit from a loss into a
modest profit.
The majority of the business continues to be spread across products such as RF
induction furnaces for the optical fibre market, plastics welders for a wide
variety of applications and associated spares and service.
There are clear signs that the growth in the fibre optic market in Asia is
accelerating. This is being driven by Asian telecoms infrastructures moving
directly to fibre based local connections rather than initial copper wiring. In
addition, Western market growth has resumed as use of video based services
through the internet has begun to stretch the utilisation of networks.
The business won several large orders for multiple fibre optic systems in late
2009 and early 2010 that provide good revenue visibility for 2010. The RF
Applications Division appears well placed to capitalise on this growth. A
number of our long-standing customers are embarking on large scale expansion
projects and Stanelco's furnaces have been specified to be included in a variety
of larger fibre making systems. The team has been undertaking continual work
both to enhance the capability of our furnaces and to reduce their inherent
costs which appears to have positioned us as the supplier of choice to this
market.
The work to broaden its RF product offering into new areas such as industrial
induction heating has continued to pay dividends with several of such units
designed and manufactured in 2009. The business is receiving an increasing
number of tenders for this area and we are confident we can capture a reasonable
share of this market.
I am pleased that the business has continued its growth path through the
macro-economic difficulties of 2009 and it enters 2010 with a substantially
larger order book than seen in the last three years.
Financial review
Revenues
Group revenues increased in the year from GBP14.8m to GBP17.9m driven by strong
growth in all parts of the Group's operations:
+---------------------------+--------------+-------------+--------+
| | | | |
| | 2009 | 2008 | Growth |
| | GBP'm | GBP'm | |
+---------------------------+--------------+-------------+--------+
| REVENUES | | | |
| by business activity | | | |
+---------------------------+--------------+-------------+--------+
| Biotec | 14.1 | 11.5 | 23% |
+---------------------------+--------------+-------------+--------+
| Biome Bioplastics | 2.4 | 1.8 | 30% |
+---------------------------+--------------+-------------+--------+
| Licence income | 0.1 | 0.4 | |
+---------------------------+--------------+-------------+--------+
| Total BioPlastics | 16.6 | 13.7 | 21% |
+---------------------------+--------------+-------------+--------+
| | | | |
+---------------------------+--------------+-------------+--------+
| RF Applications | 1.3 | 1.1 | 23% |
+---------------------------+--------------+-------------+--------+
| | | | |
+---------------------------+--------------+-------------+--------+
| TOTAL | 17.9 | 14.8 | 21% |
+---------------------------+--------------+-------------+--------+
| | | | |
+---------------------------+--------------+-------------+--------+
| | | | |
+---------------------------+--------------+-------------+--------+
30% revenue growth was achieved in the UK Bioplastics business which was
re-branded as Biome Bioplastics in January 2010.
From 1 January 2010, Biotec will no longer be treated as a subsidiary of the
Group as the rights attaching to the "Golden Share" in the Biotec joint venture,
which gave the Group control of the business, expired at the end of 2009. From
2010 onwards the Group will consolidate only 50% (its share) of the joint
venture into its results. On that basis, the Group revenues for 2009 would have
been GBP10.9m (2008: GBP9.1m). Biotec's revenues grew by 23% in the year.
Licence revenue in 2008 benefitted from a one-off GBP0.3m receipt in settlement
for a claim for royalties for an item of intellectual property.
In total, the revenues of the BioPlastics division grew by 21%.
In RF Applications revenues grew by 23%.
Operating profits/(losses)
The Group's loss from operations for the year reduced from GBP2.8m to GBP2.6m.
Before share option charges/credits, the Group's loss from operations reduced
from GBP3.2m to GBP2.5m.
An analysis of the loss from operations by business activity is given in the
table below:
+---------------------------+--------------+-------------+--------+
| | | | |
| | 2009 | 2008 | |
| | GBP'm | GBP'm | |
+---------------------------+--------------+-------------+--------+
| PROFIT/(LOSS) FROM | | | |
| OPERATIONS | | | |
| by business activity | | | |
+---------------------------+--------------+-------------+--------+
| BioPlastics - before | 0.5 | (0.2) | |
| Biotec legal costs | | | |
+---------------------------+--------------+-------------+--------+
| Biotec legal costs | (1.3) | (0.6) | |
+---------------------------+--------------+-------------+--------+
| Total BioPlastics | (0.8) | (0.8) | |
+---------------------------+--------------+-------------+--------+
| RF Applications | - | (0.1) | |
+---------------------------+--------------+-------------+--------+
| Central Costs | (1.8) | (1.9) | |
+---------------------------+--------------+-------------+--------+
| TOTAL | (2.6) | (2.8) | |
+---------------------------+--------------+-------------+--------+
| | | | |
+---------------------------+--------------+-------------+--------+
The results of the BioPlastics Division have been depressed by the significant
level of legal costs in Biotec resulting from the defence of the Novamont
litigation. Biotec's total legal costs amounted to GBP1.3m in 2009 (2008:
GBP0.6m). During the year, a significant amount of work was done in putting
together a robust defence of Novamont's claims. Before legal costs, the
BioPlastics Division made a GBP0.5m profit from operations compared with a loss
of GBP0.2m in 2008. This move into profit marks a major milestone for the
business and came from the increasing revenues and an improvement in the gross
profit margin.
The RF Division made a small profit in the year compared with a small loss in
2008. A small increase in salary costs for the new sales team were more than
offset by the increasing revenues and improved gross margin.
Central costs for the year included a share option charge of GBP0.1m. In 2008,
these costs benefitted from a GBP0.4m share option credit. Before these share
option charges/credits, central costs reduced from GBP2.3m in 2008 to GBP1.7m in
2009.
Before share option charges/credits and before the Biotec legal fees, the
Group's loss from operations reduced from GBP2.6m to GBP1.2m, reflecting the
strong revenue growth across the business and the tight control on costs.
Product development costs of GBP0.4m (2008: GBP0.4m) were capitalised in the
year. Tax R&D claims resulted in a tax credit received in the year of GBP0.1m
(2008: credit of GBP0.2m).
Finance related charges, including foreign exchange gains and losses, totalled
GBP0.9m for the year (2008: income of GBP2.3m). This included a GBP0.7m loss
(2008: GBP2.1m gain) relating to the retranslation of intercompany balances.
After foreign exchange losses and gains, the Group's loss before tax for the
year was GBP3.6m (2008: loss GBP0.5m), giving a loss per share of 0.104p (2008:
earnings per share 0.005p).
Cashflow
The net cash outflow from operating activities in the year was GBP2.3m (2008:
GBP1.4m), reflecting primarily the loss from operations of GBP2.6m. GBP0.5m of
cash was absorbed into working capital as the business expanded but this was
offset by GBP0.8m added back in the cash flows for depreciation and
amortisation. The closing cash position was GBP3.2m. The future funding
requirements of the business are discussed in the Chairman's Statement.
Key performance indicators (KPIs)
The Board is focussed on a number of Key Performance Indicators (KPIs) that are
used to measure performance.
The Group's performance against these metrics for 2009 was as follows:
+---------------------------------+---------------------------------+
| a) Financial measures | |
+---------------------------------+---------------------------------+
| | |
+---------------------------------+---------------------------------+
| Growth in total revenues | - increased by GBP3.1m (21%) |
+---------------------------------+---------------------------------+
| Growth in bioplastic revenues | - increased by GBP0.6m (30%) |
| by Biome Bioplastics | |
+---------------------------------+---------------------------------+
| Growth in total gross margin | - increased by GBP0.8m (29%) |
+---------------------------------+---------------------------------+
| | - reduced by GBP0.7m (22%) |
| Reduction in loss from | |
| operations | |
| before share option | |
| charges/credits | |
+---------------------------------+---------------------------------+
| | |
| | |
| | |
| | |
+---------------------------------+---------------------------------+
| b) Other measures | |
+---------------------------------+---------------------------------+
| | |
+---------------------------------+---------------------------------+
| Number of sets of customer | 60 |
| trials in BioPlastics | |
+---------------------------------+---------------------------------+
| Percentage of new customer | 50% |
| trials leading to | |
| production orders | |
+---------------------------------+---------------------------------+
| New product launches in RF | 3 |
+---------------------------------+---------------------------------+
The number of sets of customer trials in the year increased from 48 to 60.
There were also approximately 50 new product trials carried out with various
convertors, as we worked to finalise the characteristics of the new product
range. 50% of trials with new customers led to production orders. This was
down from 60% in 2008 when we were working with a smaller number of customers.
Employees
I would like to thank the Stanelco staff for another outstanding contribution
this year, delivering high levels of growth across the Group and developing more
successful products and business.
Paul Mines
Chief Executive Officer
+-----------------------------------+------+------------+----------+
| CONSOLIDATED STATEMENT | | | |
+-----------------------------------+------+------------+----------+
| OF COMPREHENSIVE INCOME | | | |
+-----------------------------------+------+------------+----------+
| For the year ended 31 December | | | |
| 2009 | | | |
+-----------------------------------+------+------------+----------+
| | | | |
+-----------------------------------+------+------------+----------+
| | | | |
+-----------------------------------+------+------------+----------+
| | | | |
+-----------------------------------+------+------------+----------+
| | | 2009 | 2008 |
+-----------------------------------+------+------------+----------+
| | | | |
+-----------------------------------+------+------------+----------+
| |Note | GBP'000 | GBP'000 |
+-----------------------------------+------+------------+----------+
| | | | |
+-----------------------------------+------+------------+----------+
| REVENUE | 4a | 17,911 | 14,803 |
| | - | | |
| | 4b | | |
+-----------------------------------+------+------------+----------+
| Cost of sales | | (14,263) | (11,976) |
+-----------------------------------+------+------------+----------+
| | | | |
+-----------------------------------+------+------------+----------+
| GROSS PROFIT | | 3,648 | 2,827 |
+-----------------------------------+------+------------+----------+
| | | | |
+-----------------------------------+------+------------+----------+
| Recurring administrative expenses | | (6,251) | (5,628) |
+-----------------------------------+------+------------+----------+
| | | | |
+-----------------------------------+------+------------+----------+
| LOSS FROM OPERATIONS | 4a | (2,603) | (2,801) |
| | - | | |
| | 4b | | |
+-----------------------------------+------+------------+----------+
| | | | |
+-----------------------------------+------+------------+----------+
| Investment revenue | | 33 | 371 |
+-----------------------------------+------+------------+----------+
| Finance charges | | (167) | (242) |
+-----------------------------------+------+------------+----------+
| Foreign exchange (loss)/ gain | | (815) | 2,205 |
+-----------------------------------+------+------------+----------+
| | | | |
+-----------------------------------+------+------------+----------+
| LOSS BEFORE TAXATION | | (3,552) | (467) |
+-----------------------------------+------+------------+----------+
| Taxation | | 100 | 169 |
+-----------------------------------+------+------------+----------+
| | | | |
+-----------------------------------+------+------------+----------+
| LOSS FOR THE YEAR | | (3,452) | (298) |
+-----------------------------------+------+------------+----------+
| Other comprehensive income: | | | |
+-----------------------------------+------+------------+----------+
| Exchange differences on | | | |
| translating | | | |
+-----------------------------------+------+------------+----------+
| foreign operations | | (562) | 1,742 |
+-----------------------------------+------+------------+----------+
| | | | |
+-----------------------------------+------+------------+----------+
| TOTAL COMPREHENSIVE (LOSS)/INCOME | | (4,014) | 1,444 |
| FOR THE YEAR | | | |
+-----------------------------------+------+------------+----------+
| | | | |
+-----------------------------------+------+------------+----------+
| (Loss)/income for the year | | | |
| attributable to: | | | |
+-----------------------------------+------+------------+----------+
| Equity holders of the parent | | (3,195) | 139 |
+-----------------------------------+------+------------+----------+
| Minority interest | | (257) | (437) |
+-----------------------------------+------+------------+----------+
| | | | |
+-----------------------------------+------+------------+----------+
| LOSS FOR THE YEAR | | (3,452) | (298) |
+-----------------------------------+------+------------+----------+
| | | | |
+-----------------------------------+------+------------+----------+
| | | | |
+-----------------------------------+------+------------+----------+
| Total comprehensive (loss)/ | | | |
| income for the year attributable | | | |
| to: | | | |
+-----------------------------------+------+------------+----------+
| Equity holders of the parent | | (3,415) | 1,482 |
+-----------------------------------+------+------------+----------+
| Minority interest | | (599) | (38) |
+-----------------------------------+------+------------+----------+
| | | | |
+-----------------------------------+------+------------+----------+
| TOTAL COMPREHENSIVE LOSS/ INCOME | | (4,014) | 1,444 |
| FOR THE YEAR | | | |
+-----------------------------------+------+------------+----------+
| | | | |
+-----------------------------------+------+------------+----------+
| | | | |
+-----------------------------------+------+------------+----------+
| Basic (loss)/earnings per share - | 6 | (0.104) | 0.005 |
| pence | | | |
+-----------------------------------+------+------------+----------+
| Diluted earnings per share - | 6 | n/a | 0.005 |
| pence | | | |
+-----------------------------------+------+------------+----------+
+-----------------------------------+------+------------+----------+
| CONSOLIDATED STATEMENT | | | |
+-----------------------------------+------+------------+----------+
| OF FINANCIAL POSITION | | | |
+-----------------------------------+------+------------+----------+
| As at 31 December 2009 | | | |
+-----------------------------------+------+------------+----------+
| | | | |
+-----------------------------------+------+------------+----------+
| | | | |
+-----------------------------------+------+------------+----------+
| | | | |
+-----------------------------------+------+------------+----------+
| | | 2009 | 2008 |
+-----------------------------------+------+------------+----------+
| | | | |
+-----------------------------------+------+------------+----------+
| |Note | GBP'000 | GBP'000 |
+-----------------------------------+------+------------+----------+
| | | | |
+-----------------------------------+------+------------+----------+
| NON-CURRENT ASSETS | | | |
+-----------------------------------+------+------------+----------+
| Goodwill | 7 | 15,426 | 16,746 |
+-----------------------------------+------+------------+----------+
| Other intangible assets | 8 | 848 | 501 |
+-----------------------------------+------+------------+----------+
| Property, plant and equipment | 9 | 4,105 | 5,120 |
+-----------------------------------+------+------------+----------+
| | | 20,379 | 22,367 |
+-----------------------------------+------+------------+----------+
| | | | |
+-----------------------------------+------+------------+----------+
| CURRENT ASSETS | | | |
+-----------------------------------+------+------------+----------+
| Inventories | | 2,558 | 2,502 |
+-----------------------------------+------+------------+----------+
| Trade and other receivables | | 2,930 | 2,157 |
+-----------------------------------+------+------------+----------+
| Cash and cash equivalents | | 3,219 | 6,381 |
+-----------------------------------+------+------------+----------+
| | | 8,707 | 11,040 |
+-----------------------------------+------+------------+----------+
| | | | |
+-----------------------------------+------+------------+----------+
| TOTAL ASSETS | | 29,086 | 33,407 |
+-----------------------------------+------+------------+----------+
| | | | |
+-----------------------------------+------+------------+----------+
| CURRENT LIABILITIES | | | |
+-----------------------------------+------+------------+----------+
| Trade and other payables | | 2,303 | 1,816 |
+-----------------------------------+------+------------+----------+
| Promissory notes | 10 | 6,999 | 7,543 |
+-----------------------------------+------+------------+----------+
| Obligations under finance lease | | 297 | 294 |
+-----------------------------------+------+------------+----------+
| | | 9,599 | 9,653 |
+-----------------------------------+------+------------+----------+
| | | | |
+-----------------------------------+------+------------+----------+
| NON-CURRENT LIABILITIES | | | |
+-----------------------------------+------+------------+----------+
| Obligations under finance lease | | 529 | 899 |
+-----------------------------------+------+------------+----------+
| | | | |
+-----------------------------------+------+------------+----------+
| TOTAL LIABILITIES | | 10,128 | 10,552 |
+-----------------------------------+------+------------+----------+
| | | | |
+-----------------------------------+------+------------+----------+
| NET ASSETS | | 18,958 | 22,855 |
+-----------------------------------+------+------------+----------+
| | | | |
+-----------------------------------+------+------------+----------+
| EQUITY | | | |
+-----------------------------------+------+------------+----------+
| Share capital | | 3,078 | 3,078 |
+-----------------------------------+------+------------+----------+
| Share premium account | | 38,623 | 38,623 |
+-----------------------------------+------+------------+----------+
| Share options reserve | | 611 | 494 |
+-----------------------------------+------+------------+----------+
| Translation reserve | | 1,225 | 1,445 |
+-----------------------------------+------+------------+----------+
| Retained losses | | (28,112) | (24,917) |
+-----------------------------------+------+------------+----------+
| | | | |
+-----------------------------------+------+------------+----------+
| EQUITY ATTRIBUTABLE TO EQUITY | | 15,425 | 18,723 |
| HOLDERS OF THE PARENT | | | |
+-----------------------------------+------+------------+----------+
| | | | |
+-----------------------------------+------+------------+----------+
| Minority interest | | 3,533 | 4,132 |
+-----------------------------------+------+------------+----------+
| | | | |
+-----------------------------------+------+------------+----------+
| TOTAL EQUITY | | 18,958 | 22,855 |
+-----------------------------------+------+------------+----------+
The financial statements were approved by the Board on 28 April 2010.
Signed on behalf of the Board of Directors
Paul R Mines (Chief Executive)
Susan J Bygrave (Group Finance Director)
28 April 2010
+------------------+---------+---------+---------+-------------+----------+--------------+----------+---------+
| CONSOLIDATED STATEMENT |
+-------------------------------------------------------------------------------------------------------------+
| OF CHANGES IN | | | | | | | | |
| EQUITY | | | | | | | | |
+------------------+---------+---------+---------+-------------+----------+--------------+----------+---------+
| As at 31 December | | | | | | | |
| 2009 | | | | | | | |
+----------------------------+---------+---------+-------------+----------+--------------+----------+---------+
| | Share | Share | Share | Translation | Retained | Attributable | Minority | TOTAL |
| | capital | premium | options | reserves | losses | to equity | interest | EQUITY |
| | | account | reserve | | | holders of | | |
| | | | | | | the parent | | |
+------------------+---------+---------+---------+-------------+----------+--------------+----------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+------------------+---------+---------+---------+-------------+----------+--------------+----------+---------+
| | | | | | | | | |
+------------------+---------+---------+---------+-------------+----------+--------------+----------+---------+
| Balance at 1 | 3,078 | 38,623 | 494 | 1,445 | (24,917) | 18,723 | 4,132 | 22,855 |
| January 2009 | | | | | | | | |
+------------------+---------+---------+---------+-------------+----------+--------------+----------+---------+
| | | | | | | | | |
+------------------+---------+---------+---------+-------------+----------+--------------+----------+---------+
| Share option | - | - | 117 | - | - | 117 | - | 117 |
| charges in year | | | | | | | | |
+------------------+---------+---------+---------+-------------+----------+--------------+----------+---------+
| | | | | | | | | |
+------------------+---------+---------+---------+-------------+----------+--------------+----------+---------+
| Transactions | - | - | 117 | - | - | 117 | - | 117 |
| with owners | | | | | | | | |
+------------------+---------+---------+---------+-------------+----------+--------------+----------+---------+
| | | | | | | | | |
+------------------+---------+---------+---------+-------------+----------+--------------+----------+---------+
| Loss for the | - | - | - | - | (3,195) | (3,195) | (257) | (3,452) |
| year | | | | | | | | |
+------------------+---------+---------+---------+-------------+----------+--------------+----------+---------+
| | | | | | | | | |
+------------------+---------+---------+---------+-------------+----------+--------------+----------+---------+
| Other | | | | | | | | |
| comprehensive | | | | | | | | |
| income: | | | | | | | | |
+------------------+---------+---------+---------+-------------+----------+--------------+----------+---------+
| Exchange | - | - | - | (220) | - | (220) | (342) | (562) |
| differences on | | | | | | | | |
| translation of | | | | | | | | |
| foreign | | | | | | | | |
| operations | | | | | | | | |
+------------------+---------+---------+---------+-------------+----------+--------------+----------+---------+
| | | | | | | | | |
+------------------+---------+---------+---------+-------------+----------+--------------+----------+---------+
| Total | - | - | - | (220) | (3,195) | (3,415) | (599) | (4,014) |
| comprehensive | | | | | | | | |
| income for the | | | | | | | | |
| year | | | | | | | | |
+------------------+---------+---------+---------+-------------+----------+--------------+----------+---------+
| | | | | | | | | |
+------------------+---------+---------+---------+-------------+----------+--------------+----------+---------+
| Balance 31 | 3,078 | 38,623 | 611 | 1,225 | (28,112) | 15,425 | 3,533 | 18,958 |
| December 2009 | | | | | | | | |
+------------------+---------+---------+---------+-------------+----------+--------------+----------+---------+
| | | | | | | | | |
+------------------+---------+---------+---------+-------------+----------+--------------+----------+---------+
| | | | | | | | | |
+------------------+---------+---------+---------+-------------+----------+--------------+----------+---------+
| | | | | | | | | |
+------------------+---------+---------+---------+-------------+----------+--------------+----------+---------+
| | | | | | | | | |
+------------------+---------+---------+---------+-------------+----------+--------------+----------+---------+
| Balance at 1 | 3,012 | 38,199 | 883 | 102 | (25,056) | 17,140 | 4,170 | 21,310 |
| January 2008 | | | | | | | | |
+------------------+---------+---------+---------+-------------+----------+--------------+----------+---------+
| | | | | | | | | |
+------------------+---------+---------+---------+-------------+----------+--------------+----------+---------+
| Share option | - | - | (389) | - | - | (389) | - | (389) |
| credits in year | | | | | | | | |
+------------------+---------+---------+---------+-------------+----------+--------------+----------+---------+
| | | | | | | | | |
+------------------+---------+---------+---------+-------------+----------+--------------+----------+---------+
| Issue of share | 66 | 424 | - | - | - | 490 | - | 490 |
| capital | | | | | | | | |
+------------------+---------+---------+---------+-------------+----------+--------------+----------+---------+
| | | | | | | | | |
+------------------+---------+---------+---------+-------------+----------+--------------+----------+---------+
| Transactions | 66 | 424 | (389) | - | - | 101 | - | 101 |
| with owners | | | | | | | | |
+------------------+---------+---------+---------+-------------+----------+--------------+----------+---------+
| | | | | | | | | |
+------------------+---------+---------+---------+-------------+----------+--------------+----------+---------+
| Loss for the | - | - | - | - | 139 | 139 | (437) | (298) |
| year | | | | | | | | |
+------------------+---------+---------+---------+-------------+----------+--------------+----------+---------+
| | | | | | | | | |
+------------------+---------+---------+---------+-------------+----------+--------------+----------+---------+
| Other | | | | | | | | |
| comprehensive | | | | | | | | |
| income: | | | | | | | | |
+------------------+---------+---------+---------+-------------+----------+--------------+----------+---------+
| Exchange | - | - | - | 1,343 | - | 1,343 | 399 | 1,742 |
| differences on | | | | | | | | |
| translation of | | | | | | | | |
| foreign | | | | | | | | |
| operations | | | | | | | | |
+------------------+---------+---------+---------+-------------+----------+--------------+----------+---------+
| | | | | | | | | |
+------------------+---------+---------+---------+-------------+----------+--------------+----------+---------+
| Total | - | - | - | 1,343 | 139 | 1,482 | (38) | 1,444 |
| comprehensive | | | | | | | | |
| income for the | | | | | | | | |
| year | | | | | | | | |
+------------------+---------+---------+---------+-------------+----------+--------------+----------+---------+
| | | | | | | | | |
+------------------+---------+---------+---------+-------------+----------+--------------+----------+---------+
| Balance 31 | 3,078 | 38,623 | 494 | 1,445 | (24,917) | 18,723 | 4,132 | 22,855 |
| December 2008 | | | | | | | | |
+------------------+---------+---------+---------+-------------+----------+--------------+----------+---------+
+-----------------------------------------+------------+----------+
| CONSOLIDATED STATEMENT | | |
+-----------------------------------------+------------+----------+
| OF CASH FLOWS | | |
+-----------------------------------------+------------+----------+
| For the year ended 31 December 2009 | | |
+-----------------------------------------+------------+----------+
| | | |
+-----------------------------------------+------------+----------+
| | | |
+-----------------------------------------+------------+----------+
| | | |
+-----------------------------------------+------------+----------+
| | | |
+-----------------------------------------+------------+----------+
| | | |
+-----------------------------------------+------------+----------+
| | 2009 | 2008 |
+-----------------------------------------+------------+----------+
| | | |
+-----------------------------------------+------------+----------+
| | GBP'000 | GBP'000 |
+-----------------------------------------+------------+----------+
| | | |
+-----------------------------------------+------------+----------+
| Loss from operations | (2,603) | (2,801) |
+-----------------------------------------+------------+----------+
| Adjustment for: | | |
+-----------------------------------------+------------+----------+
| Amortisation and impairment of | 78 | 148 |
| intangible assets | | |
+-----------------------------------------+------------+----------+
| Depreciation of property, plant and | 702 | 681 |
| equipment | | |
+-----------------------------------------+------------+----------+
| Share based payments | 117 | (389) |
+-----------------------------------------+------------+----------+
| (Profit)/loss on disposal of | (2) | 2 |
| property,plant and equipment | | |
+-----------------------------------------+------------+----------+
| Decrease in provisions | - | (441) |
+-----------------------------------------+------------+----------+
| Foreign exchange (loss)/gain | (88) | 81 |
+-----------------------------------------+------------+----------+
| Operating cash flows before movement of | (1,796) | (2,719) |
| working capital | | |
+-----------------------------------------+------------+----------+
| (Increase)/decrease in inventories | (190) | 4,956 |
+-----------------------------------------+------------+----------+
| (Increase)/decrease in receivables | (865) | 12 |
+-----------------------------------------+------------+----------+
| Increase/(decrease) in payables | 532 | (3,612) |
+-----------------------------------------+------------+----------+
| Cash utilised by operations | (2,319) | (1,363) |
+-----------------------------------------+------------+----------+
| Corporation tax received | 100 | 169 |
+-----------------------------------------+------------+----------+
| Interest paid | (99) | (160) |
+-----------------------------------------+------------+----------+
| Net cash outflow from operating | (2,318) | (1,354) |
| activities | | |
+-----------------------------------------+------------+----------+
| | | |
+-----------------------------------------+------------+----------+
| Cash flows from investing activities | | |
+-----------------------------------------+------------+----------+
| Interest received | 33 | 371 |
+-----------------------------------------+------------+----------+
| Proceeds on disposal of property, plant | 2 | 2 |
| and equipment | | |
+-----------------------------------------+------------+----------+
| Investment in intangible assets | (432) | (416) |
+-----------------------------------------+------------+----------+
| Purchase of property, plant and | (69) | (307) |
| equipment | | |
+-----------------------------------------+------------+----------+
| Settlement of deferred consideration | - | (487) |
+-----------------------------------------+------------+----------+
| Net cash used in investing activities | (466) | (837) |
+-----------------------------------------+------------+----------+
| | | |
+-----------------------------------------+------------+----------+
| Financing activities | | |
+-----------------------------------------+------------+----------+
| Repayment of obligations under finance | (270) | (219) |
| lease | | |
+-----------------------------------------+------------+----------+
| Proceeds from the issue of shares | - | 482 |
+-----------------------------------------+------------+----------+
| Net cash from financing activities | (270) | 263 |
+-----------------------------------------+------------+----------+
| | | |
+-----------------------------------------+------------+----------+
| Net decrease in cash and cash | (3,054) | (1,928) |
| equivalents | | |
+-----------------------------------------+------------+----------+
| | | |
+-----------------------------------------+------------+----------+
| Cash and cash equivalents at beginning | 6,381 | 8,059 |
| of year | | |
+-----------------------------------------+------------+----------+
| Effect of foreign exchange rate changes | (108) | 250 |
+-----------------------------------------+------------+----------+
| Cash and cash equivalents at end of | 3,219 | 6,381 |
| year | | |
+-----------------------------------------+------------+----------+
NOTES TO THE CONSOLIDATED FINANCAL STATEMENTS
For the year ended 31 December 2009
1. NON-STATUTORY FINANCIAL STATEMENTS
The financial information set out in this preliminary announcement does not
constitute the Group's statutory financial statements for the year ended 31
December 2009 or 2008 but is derived from those financial statements. Statutory
financial statements for 2008 have been delivered to the Registrar of Companies.
Those for 2009 will be delivered following the Company's Annual General
Meeting, which will be convened in June 2010. The auditors have reported on
those accounts: their report contained an emphasis of matter paragraph drawing
attention to the material uncertainty around going concern, as explained in Note
2 below. Their report did not contain any statements under Section 498(2) or
(3) of the Companies Act 2006.
The financial statements, and this preliminary statement, of the Group for the
year ended 31 December 2009 were authorised for issue by the Board of Directors
on 28 April 2010 and the balance sheet was signed on behalf of the Board by Paul
R Mines and Susan J Bygrave.
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.
The Group's financial statements for 2009 have been prepared in accordance with
the accounting policies adopted in the Group's financial statements for 2008
except for the adoption of IAS 1 Presentation of Financial Statements (Revised
2007) and IFRS 8 Operating Segments.
The adoption of IAS 1 (Revised 2007) does not affect the financial position or
profits of the Group, but gives additional disclosures. The measurement and
recognition of the Group's assets, liabilities, income and expenses is
unchanged, however, some items that were recognised directly in equity are now
recognised in other comprehensive income, for example, exchange differences on
translating foreign operations. IAS1 (Revised 2007) affects the presentation of
the owner changes in equity and introduces a "Statement of comprehensive
income". Further, a "Statement of changes in equity is now presented".
The adoption of IFRS 8 has not changed the segments that are disclosed in the
financial statements. In the previous annual and financial statements, segments
were identified by reference to the dominant source and nature of the Group's
risks and returns. Under IFRS 8 the accounting policy for identifying segments
is now based on internal management reporting information that is regularly
reviewed by the chief operating decision maker. These are the same for the
Group.
The directors have reviewed forecasts 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 historical and current industry knowledge, taking future growth
into account. These forecasts demonstrate that there is a need for the Company
to seek further funding if it is to continue with its growth strategy and the
Board has, therefore, announced that it is seeking to raise up to GBP3.5 million
(before expenses) from a planned fundraising, to be achieved through a placing
and open offer.
If this fundraising is not successful then the directors have identified a
number of actions that they could take to conserve the Group's cash resources
and generate funds. These include the cessation of much of the Group's current
growth and development activities, a significant reduction in central costs and
seeking an orderly disposal of the Company's investments, as discussed in the
Chairman's Statement.
The directors consider that the actions detailed above should generate
sufficient cash to enable the Company and the Group to meet operational
requirements whilst the Board pursues alternatives for realising shareholder
value. However, successful disposal of the Group's investments cannot be
guaranteed nor can the swift liquidation of its working capital or the
continuing growth of the RF Applications Division if it becomes more closely
constrained in terms of cash.
The directors have concluded that the combination of these circumstances
represents a material uncertainty that casts significant doubt over the
company's ability to continue as a going concern and that, therefore, the
company may be unable to realise its assets and discharge its liabilities in the
normal course of business. Nevertheless, after making enquiries and considering
the uncertainties described above, the directors have a reasonable expectation
that the Company and the Group have adequate 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 Company
and the Group's financial statements.
As with all business forecasts, the directors' statement cannot guarantee that
the going concern basis will remain appropriate given the inherent uncertainty
about future events.
3. BASIS OF CONSOLIDATION
The Group's financial statements consolidate the results of the Company and all
of its subsidiary undertakings drawn up to 31 December 2009. 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 2009 the
subsidiary undertakings were Stanelco RF Technologies Limited, InGel
Technologies Limited, Adept Polymers Limited, Aquasol Limited, Stanelco Inc,
Biotec Holding GmbH Group, Biotec Biologische Naturverpackungen GmbH & Co KG and
Biotec Biologische Naturverpackungen Forschungs-und Entwicklungs GmbH.
The Group's shareholding in Biotec is 50 per cent. However until 31 December
2009, the Group was party to an agreement giving it a casting vote over all
material decisions and so Biotec is accounted for as a subsidiary on the basis
of control in the Group's financial statements for the year ended 31 December
2009. The casting vote expired on 31 December 2009 and from 1 January 2010
Biotec will cease to be fully consolidated.
The assets and liabilities of the Stanelco 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 2009
+--------------------+----------+----------+-------------+----------+--------------+----------+---------+----------+---------+
| | | | Bioplastics | | RF | | Central | | Total |
| | | | | | Applications | | Costs | | |
+--------------------+----------+----------+-------------+----------+--------------+----------+---------+----------+---------+
| | | | 2009 | | 2009 | | 2009 | | 2009 |
+--------------------+----------+----------+-------------+----------+--------------+----------+---------+----------+---------+
| | | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 |
+--------------------+----------+----------+-------------+----------+--------------+----------+---------+----------+---------+
| | | | | | | | | | |
+--------------------+----------+----------+-------------+----------+--------------+----------+---------+----------+---------+
| Revenue from | | | 16,590 | | 1,321 | | - | | 17,911 |
| external customers | | | | | | | | | |
+--------------------+----------+----------+-------------+----------+--------------+----------+---------+----------+---------+
| | | | | | | | | | |
+--------------------+----------+----------+-------------+----------+--------------+----------+---------+----------+---------+
| (LOSS)/PROFIT FROM | | | (799) | | 40 | | (1,844) | | (2,603) |
| OPERATIONS | | | | | | | | | |
+--------------------+----------+----------+-------------+----------+--------------+----------+---------+----------+---------+
| | | | | | | | | | |
+--------------------+----------+----------+-------------+----------+--------------+----------+---------+----------+---------+
| Investment revenue | | | | | | | | | 33 |
+--------------------+----------+----------+-------------+----------+--------------+----------+---------+----------+---------+
| Finance charges | | | | | | | | | (167) |
+--------------------+----------+----------+-------------+----------+--------------+----------+---------+----------+---------+
| Foreign exchange | | | | | | | | | (815) |
| loss | | | | | | | | | |
+--------------------+----------+----------+-------------+----------+--------------+----------+---------+----------+---------+
| | | | | | | | | | |
+--------------------+----------+----------+-------------+----------+--------------+----------+---------+----------+---------+
| LOSS BEFORE | | | | | | | | | (3,552) |
| TAXATION | | | | | | | | | |
+--------------------+----------+----------+-------------+----------+--------------+----------+---------+----------+---------+
| | | | | | | | | | |
+--------------------+----------+----------+-------------+----------+--------------+----------+---------+----------+---------+
| TOTAL ASSETS | | | 24,601 | | 1,299 | | 3,186 | | 29,086 |
+--------------------+----------+----------+-------------+----------+--------------+----------+---------+----------+---------+
4b. SEGMENTAL INFORMATION FOR YEAR ENDED 31 DECEMBER 2008
+--------------------+----------+----------+-------------+----------+--------------+----------+---------+----------+---------+
| | | | Bioplastics | | RF | | Central | | Total |
| | | | | | Applications | | Costs | | |
+--------------------+----------+----------+-------------+----------+--------------+----------+---------+----------+---------+
| | | | 2008 | | 2008 | | 2008 | | 2008 |
+--------------------+----------+----------+-------------+----------+--------------+----------+---------+----------+---------+
| | | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 |
+--------------------+----------+----------+-------------+----------+--------------+----------+---------+----------+---------+
| | | | | | | | | | |
+--------------------+----------+----------+-------------+----------+--------------+----------+---------+----------+---------+
| Revenue from | | | 13,728 | | 1,075 | | - | | 14,803 |
| external customers | | | | | | | | | |
+--------------------+----------+----------+-------------+----------+--------------+----------+---------+----------+---------+
| | | | | | | | | | |
+--------------------+----------+----------+-------------+----------+--------------+----------+---------+----------+---------+
| LOSS FROM | | | (844) | | (15) | | (1,942) | | (2,801) |
| OPERATIONS | | | | | | | | | |
+--------------------+----------+----------+-------------+----------+--------------+----------+---------+----------+---------+
| | | | | | | | | | |
+--------------------+----------+----------+-------------+----------+--------------+----------+---------+----------+---------+
| Investment revenue | | | | | | | | | 371 |
+--------------------+----------+----------+-------------+----------+--------------+----------+---------+----------+---------+
| Finance charges | | | | | | | | | (242) |
+--------------------+----------+----------+-------------+----------+--------------+----------+---------+----------+---------+
| Foreign exchange | | | | | | | | | 2,205 |
| loss | | | | | | | | | |
+--------------------+----------+----------+-------------+----------+--------------+----------+---------+----------+---------+
| | | | | | | | | | |
+--------------------+----------+----------+-------------+----------+--------------+----------+---------+----------+---------+
| LOSS BEFORE | | | | | | | | | (467) |
| TAXATION | | | | | | | | | |
+--------------------+----------+----------+-------------+----------+--------------+----------+---------+----------+---------+
| | | | | | | | | | |
+--------------------+----------+----------+-------------+----------+--------------+----------+---------+----------+---------+
| TOTAL ASSETS | | | 27,087 | | 1,075 | | 5,245 | | 33,407 |
+--------------------+----------+----------+-------------+----------+--------------+----------+---------+----------+---------+
5. TAXATION
The Group's policy is to recognise tax credits resulting from tax R&D claims on
a cash received basis. A claim was submitted in respect of the year ended 31
December 2008 and was settled during 2009. 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 year of GBP3,195,000 (2008: profit of
GBP139,000) and a weighted average of 3,078,340,917 (2008: 3,049,093,286)
ordinary shares in issue.
Basic and diluted earnings per share are equal in 2008 as all outstanding share
options were out of the money for the purposes of the diluted earnings per share
calculation.
7. GOODWILL
The decrease in goodwill since 31 December 2008 is due to the depreciation of
the Euro during the reporting period. This increase will reverse should the Euro
appreciate in future periods.
8. OTHER INTANGIBLE ASSETS
Other intangible assets increased in the year as a result of the capitalisation
of GBP432,000 of product development costs. The amortisation charge for the
period was GBP78,000.
9. PROPERTY, PLANT AND EQUIPMENT
There were no significant additions to property, plant and equipment during the
reporting period. The decrease in property, plant and equipment in the reporting
period reflected the depreciation of the Euro and the depreciation charge for
the period.
10. PROMISSORY NOTES
Promissory notes are amounts due from members of Biotec Holding GmbH Group to
the 50 per cent shareholder, SPhere. 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% and are repayable on demand. During 2009 the
depreciation of the Euro resulted in a loss of GBP618,000 in the value of the
promissory notes.
11. 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
has been received and is in favour of Biotec. Biotec continues to defend the
claims made by Novamont robustly and Stanelco and Biotec continue to take
professional and technical advice with regard to this litigation, and are
confident of a successful outcome. Further details on this matter are set out
in the Chief Executive's Statement.
12. POST BALANCE SHEET EVENTS
The Group's shareholding in Biotec is 50 per cent. However until 31 December
2009, the Group was party to an agreement giving it a casting vote over all
material decisions and so Biotec was accounted for as a subsidiary on the basis
of control in the Group's financial statements. The casting vote expired on 31
December 2009 and from 1 January 2010 Biotec will cease to be fully
consolidated.
The first court judgement on Novamont's proceedings against Biotec was received
in France in April 2010 and was in favour of Biotec. Further details on this
matter are set out in the Chief Executive's Statement.
The Board has announced today that it is seeking to raise up to GBP3.5m (before
expenses) from a planned fundraising, to be achieved through a placing and open
offer of the Company's shares. Further details on this matter are set out in
the Chairman's Statement.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UWRARRKASUUR
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