Stanelco plc - Biome Technologies

Stanelco plc
Annual General Meeting 22nd June 2010
Stanelco Today
•
Completing its transformation into a market leading bioplastics
technology business (re-branded as Biome Bioplastics)
•
Growing sales rapidly with an exciting range of new products emerging
from the development pipeline
•
Working with a number of international customers on a number of notable
commercial scale projects
•
A trajectory of three years of revenue growth and operating profit/loss
improvement
•
Re-financed through recent placing and open offer
•
Moving to the AIM market and to be re-named Biome Technologies plc
Strategic Intent
•
Build a clear market leading position in bioplastics based on patented
technology
•
Develop from existing patent/technology base a range of new functional
products in application areas where premiums can be obtained
•
Create and build bioplastic markets by working intimately with
consumer facing international business - applications lead
•
Drive differentiation by developing and retaining a team that is
recognised as head and shoulders above the competition in application
and product engineering
•
Align Group structure/resources towards these goals
3
Group Structure
On 13th July becomes:
Biome Technologies plc
BIOM
(AIM)
Stanelco plc
SEO
(main market)
Sales £17.9m
SPhere SA
France
Sales £2.4m
Growth 30%
[Q1 2010 76%]
Biotec
Manufacturing
JV 50/50
Stanelco RF
Technologies
Sales £1.3m
Growth 23%
UK (100% owned)
Self standing business
Profitable & growing
Sales £14.2m
Bioplastics Division
UK (100% owned)
Sales & Marketing
IP Development
All figures: year to December 2009
Germany (50% owned)
Manufacturing
Product Industrialisation
Legacy IP
4
Historic Trading
Stanelco P&L
Revenue
2006*
2007
2008
2009
Audited
£'m
Audited
£'m
Audited
£'m
Audited
£'m
6.7
8.1
14.8
17.9
(5.4)
(6.2)
(12.0)
(14.3)
1.3
1.9
2.8
3.6
Administrative expenses
(7.9)
(5.0)
(5.6)
(6.2)
Loss from operation
(before exceptional items)
(6.6)
(3.1)
(2.8)
(2.6)
Exceptional items
(8.4)
(2.5)
(15.0)
(5.6)
Cost of sales
Gross profit
Loss from operations
(2.8)
(2.6)
* 14 months, restated to show production costs as part of "Cost of Sales" - as in later periods
•
2008 saw 84% revenue growth, 2009 revenue growth 21%, with 30% revenue growth in
Stanelco’s own Bioplastic sales, through Biome
•
Administrative Expenses managed tightly:
ƒ
ƒ
ƒ
2006/7 cessation of non-core activities (e.g. Greenseal/Aquasol/Adept)
2009 includes a £389k share option credit in 2008 and £117k charge in 2009
Includes legal costs in Biotec of £631k in 2008 and £1,260k 2009, majority associated with the
Novamont patent case
5
Cash & Investment
Stanelco Cashflow
2007
2008
2009
Audited
£'m
Audited
£'m
Audited
£'m
Cash at start of year
12.9
8.1
6.4
Bioplastics gross profit
1.4
2.3
3.0
Biotec operating costs
Biome development and sales costs
(1.8)
(2.0)
(0.5)
(2.0)
(0.5)
Biotec legal costs
(0.3)
(0.6)
(1.3)
Central costs
Other
Exceptional items
(2.1)
(0.3)
(2.5)
(1.9)
(0.1)
(1.8)
-
Operating loss
Other cash movements
(5.6)
0.8
(2.8)
1.1
(2.6)
(0.6)
8.1
6.4
3.2
Cash at end of year
•
Management sought to manage cash
rigorously over period
•
Robust underlying business margin model
constrained by Novamont patent case
•
Significant revenue investment in Biome
new product/market development
•
Cash position at end May £2.4m before
~£2.8m net inflow from fund-raising (May 2010
Management Estimate with Biotec 50% consolidated)
•
Consistent improvement in operating loss
•
Cash burn in respect of central costs to be
reduced by £0.3m p.a.
6
Bioplastics Division
Biome Bioplastics
•
Business re-branded in early 2010; well
received in market
•
Launch of Biome HT and BiomeClear has met
with significant interest
•
Business volumes continue to grow strongly
– We are now shipping enough bioplastic material each
month to make the equivalent of:
•
•
•
•
13 million sets of disposable knives/forks and cup lids or
7 million razors or
9 million compostable bags
Team/UK development facility expanded in
2009. North American market – development
work now converting to orders
Biotec
•
Unit now provides only manufacturing
and product industrialisation support
to JV partners
•
Advisory Board runs business on
50/50 basis
•
Novamont legal case continues to be
a focus for team after first important
legal case (found in Biotec’s favour)
•
Sufficient capacity for the medium
term and significant automation
ensures that production volume can
flex with demand
Biome Product Development
Waste Management
Disposables
Food Packaging
Consumer Electronics
Horticulture
Food service
Cosmetics
Durable goods
Current Applications
Developing End Uses
10
Stanelco RF Technologies
Stanelco RF Technologies
•
The Stanelco brand is strong and business
continues to consolidate position as the preeminent global supplier of optical fibre furnaces
•
We are continuing to re-build the general
industrial business by expanding into different
end-uses and geographic markets
•
The Optical Fibre furnace business is growing
rapidly. Last year we manufactured 2 furnaces
whereas this year we have built 6 in the first 6
months.
•
Our furnaces have an amazing specification
and are marvels of advanced engineering
Fibre production (each furnace)
–
–
–
–
2600km per day
800,000km per year of fibre
enough to go round the world more than 20 times
enough to go to the moon, circle it 3 times and come back
Temperature Capability
–
–
–
exhaust from a jet engine is typically 900 degrees C
atmospheric re-entry temperature experienced by Space Shuttle is 1650
degrees C
Stanelco furnace is run at a blistering 2200 degrees C
The Next Phase
Acceleration of Top-line Growth
•
•
•
New applications for existing products: mulch films, gloves, horticultural products
New products launches
Conclusion of collaborations with market leading brand partners, in food, fmcg
and electronics sectors ensures products satisfy existing commercial needs
A Significant Cost Reduction
•
•
Using increasing scale to drive down raw material costs
Supporting growth strategy Board to reduce remuneration packages by 30%, plus
further cost reductions
Successful Funding Supports
•
•
•
•
Continued development of product/market position to assure commercial/technical
leadership
Quoted company costs until scale reached (now AIM)
Working capital growth that accompanies rapid sales growth
Resolution of Novamont patent claim as appropriate
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Group Outlook
•
Edison Investment Research now providing coverage on the business;
providing a view of future performance (to be updated shortly)
•
Edison view of growth in 2010:
– Biome Bioplastics
– Biotec
45%
8%
– RF Technologies
20%
This level of growth is being exceeded by all divisions at this point in the
year
•
The Board is pleased to have raised the full amount of the funds required
to finance the businesses growth
•
The Board is confident in future performance of the business
Revenue Growth Delivered
Revenue (£'m)
Biotec (50%)
Biome Bioplastics
RF
Licence income
Growth
2007
2008
2009
Proforma Proforma Proforma
3.2
5.7
7.1
0.4
1.8
2.4
1.1
1.1
1.3
0.2
0.4
0.1
4.8
9.1
10.9
2008
2009
Proforma Proforma
77%
23%
385%
30%
2%
23%
88%
20%
•
Biotec to be proportionally consolidated from 2010, with 50% of its revenues being
included in Stanelco’s results
•
Prospects for revenue growth primarily from Stanelco’s own bioplastic sales, through
Biome Bioplastics (developed from £0.4m to £2.4m over 2 years). No capacity constraints
from Biotec within medium term
•
Q1 2010 has seen accelerating sales growth over Q1 2009; Biome Bioplastics 76%, RF
58% and Proforma Group 26% (March 2010 Management Estimate with Biotec 50% consolidated)
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