Bioganix plc a leader in the in-vessel composting of organic waste materials, announces that it intends to seek a listing on the Alternative Investment Market (AIM) of the London Stock Exchange in April of this year.
The flotation will be by way of a placing to raise approximately £2 million through its nominated adviser and broker Rowan Dartington & Co Ltd. The Company is expected to have a market capitalisation on flotation of approximately £7 million.
Bioganix was established in 2001 to address the increasingly complex needs of the waste management industry in treating controlled wastes, notably those governed by the 'Animal By-Products Regulations' introduced in 2003. These regulations require that animal derived or contaminated waste products be specifically treated before sending to landfill or spreading on land. Wastes processed by Bioganix include food wastes, local authority organic wastes and agricultural by-products, which are converted into a nutrient rich compost that is used principally as an agricultural fertilizer replacement.
The Company's in-vessel technology developed over a number of years provides a controllable, cost effective, environmentally and socially acceptable means of processing both source-separate and mixed wastes to the full EU standards. The plant is modular in design, lies horizontally and rotates to ensure the progress of the waste through the chamber via an Archimedean screw. Each chamber has the capacity to process 12,000 tonnes of waste per annum. End to end process time is approximately 100 hours. Odour is controlled through a three stage air scrubbing and filtering process.
The Company currently owns two plants. The first, at Wharton Court, Leominster, has been operating for over three years during which time it has processed in excess of 30,000 tonnes of waste. The plant has been profitable for the last two financial years ended 31 December 2005. It received its full licence under ABPR from the State Veterinary Service in July 2003. The Wharton plant has the capacity to process approximately 12,000 tonnes of waste per annum.
The second plant, which is scheduled to become operational in April 2006, has been built in Ipswich following the award of a contract by Suffolk County Council. The 10 year contract, to process an estimated 12,000 tonnes per annum of green and kitchen waste, was won in a competitive tender. This will represent approximately 50% of its initial processing capacity of around 24,000 tonnes per annum. The plant has planning permission to process up to 35,000 tonnes per annum of waste and the Directors intend to increase the capacity of the Ipswich plant to 35,000 tonnes by the end of 2007
Results for the last three financial years ended 31st December 2005 show turnover increasing from £297,000 in 2003 to £698,000 in 2005 and from operating losses of £520,000 to a small profit during the same period. Trading at the Wharton plant continues to be satisfactory and in line with management's expectations. Plans for a further new plant continue to progress satisfactorily. The net proceeds of the Placing will allow work to commence on this further plant in the second half of 2006, and will be used to expand capacity of the Ipswich plant and to finance working capital.
The Directors believe that increasing EU legislation and environmentally driven regulations governing the waste management industry present significant growth opportunities for the business. Financial penalties are already in place for councils exceeding their landfill targets under the European Landfill Directive, effective 1st April 2005. Conversely, councils with low levels of qualifying landfill have the opportunity to profit from trading their unused allowances.
Economic and legislative barriers to entry, especially the rigorously enforced licensing systems imposed by the State Veterinary Service and the Environment Agency, help protect the company's market position and enhance its prospects for growth. Bioganix has satisfied all the criteria and can demonstrate a compliant process for the purposes of securing planning permissions for the roll-out of further plants throughout the UK.
Commenting on the proposed flotation, Bioganix Managing Director Nick Helme said:
"The Bioganix team have worked hard to develop a reliable industrial process that is now able to transform organic waste materials into a natural compost that can be used to replace artificial fertilisers, especially Nitrogen. (Note that the production of artificial Nitrogen uses large quantities of fossil fuels and creates green-house gasses).
The Bioganix process is designed to fit into a factory environment and to meet the most stringent legislative requirements. This is giving us the ability to locate plants where they are needed and allows access to a very wide range of waste feed stocks. These include local authority wastes, food industry wastes and "out of code" supermarket products, all paying Bioganix a gate fee to take their material. Our AIM listing will give us access to the capital required to build on our existing business by adding further plants."
