One of today's big risers is a company called Biome Technologies following a positive trading update. I didn't recognise the name at first, but when I glanced at the news I noticed that part of the company is Stanelco. I do remember Stanelco, I seem to remember that they were developing some packaging technology some years ago, but were continually making losses. A real jam tomorrow company. I did follow their fortunes for a while, but lost interest. Is Biome Stanelco in disguise or was it acquired? Perhaps someone can help out here?
Anyway, Biome have released a positive trading update today, and the share price has risen accordingly. In fact by 12% whilst I am writing this article.
The company appears to comprise of two divisions:- A 'Bioplastics Division' and 'Stanelco RF Technologies Division'. In today's first quarter update both divisions are trading well ahead of the same period last year with Bioplastics recording revenues of £0.5m (Q1 2013: £0.2m) and Stanelco revenues of £0.6m (Q1 2013: £0.2m). The cash burn during the period is just £0.1m, 'reflecting increased activity, receipt of deposits for the RF Technologies division and working capital movements.' A confident outlook has been expressed for the year as a whole based upon increasing volumes of Biome's materials being procured in the period for use in the US single-serve coffee market amongst other applications, and Stanelco's order book growing in an encouraging manner with 2014 orders now in excess of the revenues achieved in 2013. Activity has now commenced on the recently announced GBP1.5m contract to supply advanced analytical equipment to a customer in a regulated industry.
Looking at last year's results and today's trading statement, revenues are increasing from a very low base and profitability looks some way off. Cash burn in 2013 was significant. However, if they can continue to control the cash burn whilst accelerating sales then this could be an interesting punt.
Tangible assets come in at £4.4m with no debt, against a market cap. of approx. £4m after today's share price rise. Not one where I'll be chasing up the share price, and I'd definitely need to do more research, but interesting nevertheless.
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