for more information about stanelco click on the links.

driver's research page link
http://www.moneyam.com/InvestorsRoom/posts.php?tid=7681#lastread
website link
http://www.stanelco.co.uk/index.htm

Good morning all

Another good news morning which I think will help to consolidate the sp.

Basa Great bit of predicting you are getting to good at this

Regards

PT

Hi All,

I don't know what the gross margin is on TPS, but I do know that Biotec uses 140,000 tons of plastic a year, so they could increase their usage by over 11x todays figure, over the next few years, so work that one out :)

Also TPS becomes more profitable, the bigger the quantity you manufacture.

I say it shows that Stanelco were right to go JV on Biotec with S.P Metal, as the reduced cost to S.P Metal shows that Biotec CAN undercut the cost of petro-plastics, when also distributed by Stanelco to food packaging companies, so expect deals on that front with ASDA, after trials are completed.

I agree it is not the deal everyone is looking for at this particular time, but it's still a good one, maybe worth 1p to 1.5p on the price from an investing point of view.

Cheers,

PM

mmmmmmm, 12,000 metric tonnes, how many yards is that?

About the equivalent (guess) of ordering 300 greenseal machines !!!
Baza

so even though biotec is jointly owned, sp metal have to pay to get the pellets because this part of the company is owned by seo?

I wonder if they have to pay for the bog roll if they wander into the SEO half.

driver , thats a daft question. of course they do!!

Bet it's a fun place to be when its time to buy the coffee and biscuits for the staff tea room!!!

1/ Biotec is a JV - Biotec turnover does not count towards SEO turnover - only the Profit or Loss it generates goes on to the SE0 books.

2/ 20M Euro was the value of turnover - (not the profit) Biotec is still loss making and SP Metal was buying this before from Biotec.

3/ Profit lets say 10% as its a JV partner ordering from the JV - so profit is 2M Euro per year - adding in to the debt owed by Biotec and its losses - it may now even make Biotec break even in a year (shame Biotec is still in debt though).

4/ Any profit from Biotec is split 50/50 with SP Metal.

5/ SE0 have to half pay for the works needed !


Do you see the reason now that SE0 HAD TO sell half of Biotec to SP Metal - they were had by the balls

Carry on in the downtrend and probably more quickly later this week - all IMO.

This was smoke and mirrors - a nothing announcement designed to confuse - and still no more Greenseal orders or news - its looking dire is it not ?

Is it not - I think is the answer!
Baza

Very interesting development. The underlying message is that SEO are really gearing up with their partners to fully exploit Greenseal and biodegradables. I'm not sure whether the question re the implications for volume of Greenseal machines has been answered. In other words, what volume of biodegradable trays would be consumed by a typical machine with an ASDA supplier? Don't know whether that is in your field PM or perhaps andysmith is the man. Happy myself that the jigsaw is coming together. The froth is now out of the sp, IMO.

Regarding orders, whilst it would be good to have more, the most imporatnt thing at the moment is the completion of the ASDA trials process which has the primary objective now of amassing evidence so that ASDA can reduce their payments to suppliers which effectively forces them to adopt the technology. Again, IMO, Wal-mart are surely sensible to await the completion of the process and then apply exactly the same approach. Nice to have another user but Stanelco are surely sensible to play the ASDA/Wal-Mart approach as it will give a rapid and effective roll-out which will also be manageable.

Having really added something of a note of caution in terms of RNS announcements re orders, I am re-building my CFD position and very comfortable in doing so.

Eric

i think this deal backs up what i was told by seo , that they had made loss making biotec profitable within a week!!! as pm1 says , the more they make, the less it costs!!

That feels better - topped up the SEO CFDs to 360K, getting ready for the return to 30p. May be a few weeks but it will surely happen. ii manages to get his negative spin again, inevitably. He's not only a half-empty sort of chap, he is absolutely empty; 'emptyinsiderinside' in fact! lol!

Eric

Baza - can you spare us a drop o' that water of yours - so I can set up me own tipple sheet.

I don't think today's announcement has anything to do with greenseal. But for a $12.5m = ~Euro10.4m investment, SEO now have secured a turnover of Euro10m in their first JV year - thus Biotec looks like it will be doing the business as a viable and even profitable company.

However all this is genedrated by the bit of the business that SP Metals is interested in for their plastic bags etc - of which SEO share half the results. In itself it menas nothing for starch based polymers destined for trays and lids. But the important thing is that SEO have a viable supplier over whcih it has high control for when it does call on these supplies.

For a very cheap investment already paying for itself with other business, SEO have a secure supply at a controllable price of an essential raw material for its own business. Another proof of the level of goood strategic management we all enjoy.

BTW - the bog rolls are not shared out between the two halves of the ownership, they are owned in undivided shares of 50% each - work out the logistics of that during the morning coffee break!.

sd

Hi All,

I bring you this, the last KBC Peel Hunt, 'Stanelco' Brokers Note ....

http://www.peelhunt.com/pdfs/Stanelco7Jul05.pdf

It's 8 pages of quality material, a MUST READ ....

Cheers,

PM

Research Page updated, click on my little green house (If you dare)

22 Biotec Joint Venture wins 20m annual order from SP Metal S.A. ('SP Metal'):

Hi All,

As I said earlier, S.P.Metal uses 140,000 tons of plastic per year, and today's deal is just the start, as they convert all their plastic to Biotec TPS, as we are also informed in the KBC note I linked to earlier .... "SP Metal produces plastic film for the use in refuse bags, shopping and freezer bags and as a result of the deal we anticipate increased sales as existing plastic film is substituted with Biotec material."

Also "This joint venture will accelerate the move towards profitability of Biotec."

And "There are also potential opportunities to gain access to SP Metals customer base for the groups other products including GREENSEAL."

And ....

The benefits of Starpol 2000 are:

It is Biocompostable

It is flexible and not brittle at temperatures as low as 28c

As a gas barrier it is at least 10x better than polypropylene and thus food trays can be made thinner.

It is easy to manufacture

It can be both heat and RF sealed.

And ....

Biotec

The upside is impossible to quantify at the moment but could potentially match, or even exceed that of the groups GREENSEAL product.

It all sounds like my 3-5 year plan for holding Stanelco shares, is spot on ....

Cheers,

PM

Paul: thanks for posting the Peel Hunt reference. It is well worth reading and sheds light on the Biotec and Starpol 2000 relevance - looks very positive and adds significantly to SEO net worth. The royalties structure is elucidated (that means 'made clear' sd!). This is more positive than my own projections as it shows that royalties are payable in the year of installation for the balance of the year. A plus point is that Peel Hunt are company brokers and have access to actual figures. The figures are understandably cautious showing a maximum monthly installation rate of 35 machines; my own view is that this could reach 100 or more.

I suspect a number of readers are somewhat nervous with the recent retracement of the sp. Its worth looking at the chart of the sp above. March saw a trading range of 15p to 18p; April saw a breakthrough to 20p to 23p on the back of the ASDA agreement and the Premier and Advanced plans for the US. We then saw a period of speculation that a Wal-Mart deal would be announced and a spurt to 30p. In hindsight this was premature: it is taking longer than expected (by us, possible by Stanelco) to establish the ASDA base for ASDA themselves to persuade their suppliers to adopt the technology; this process has to be completed before a Wal-Mart programme, which may morror that for ASDA but somewhat expedited, can follow. Meanwhile we have had the related initiative with Biotec and the manufacturing agreement with Mondini. Its not surprising that the sp has returned to the 20 to 23p trading range and looked as though it would go back to March levels. My own view is that the conditions in April are more appropriate implying a trading range of 20 to 23p. This should end when the ASDA trials are complete and an order flow starts. We will then be back to US considerations and may well have some briefing on plans; the sp should then return to the 30p high. A breakthrough above that level will depend on the potential Wal-Mart deal, speculation or fact. My own view is that this is almost certain, given the success of the ASDA deal, the financial benefits to ASDA; it is a no-brainer to assume that Wal-Mart will proceed with haste to achieve these benefits for themselves.

Thus the current sp is a superb opportunity to build a really worthwhile stake. I am not expecting the main action until September with the ASDA deal then rolling out and then the US deal sometime in Q4. It is an investment rather than a trading situation. By the end of the year we should know just what the projections are. If it is 100 machines per month and we have a volume of 5000 machines in view then we are looking at an sp of 1+. This is my personal view; events over the last three months have reinforced the view. I keep looking for worrying signs but, to the contrary, each move has served to strengther the business base and I am now very comfortable with the risk element (which still cannot be ignored!).

Eric

Eric Hi,

Good analysis, as always :)

Cheers,
PM