TIDMBMK
RNS Number : 6167X
Benchmark Holdings PLC
20 December 2019
20 December 2019
Information within this announcement is deemed by the Company to
constitute inside information under the Market Abuse Regulations
(EU) No. 596/2014.
Benchmark Holdings plc
("Benchmark", the "Company" or the "Group")
Q4 Results
(3 months ended 30 September 2019)
In compliance with the terms of its senior secured bond which
require the Company to publish quarterly financial information,
Benchmark, the aquaculture health, nutrition and genetics business,
announces its unaudited results for the 3 months ended 30 September
2019 (the "period"). All Q4FY19 figures quoted in this announcement
are based on unaudited accounts.
This morning the Company published its full year audited results
for the 12 months ended 30 September 2019 which can be found on
https://www.benchmarkplc.com/investors
GBPm Q4 2019 Q42018 % YTD 2019 Restated*
unaudited unaudited (Full year) YTD 2018
(Full year)
------------------------------------ ----------- ----------- ------- ------------- -------------
Adjusted
------------------------------------ ----------- ----------- ------- ------------- -------------
Adjusted EBITDA(2) from continuing
operations 7.5 7.0 6.8 12.1 19.1
------------------------------------ ----------- ----------- ------- ------------- -------------
EBITDA(1) from continuing
operations 6.9 6.7 4.2 11.5 17.8
------------------------------------ ----------- ----------- ------- ------------- -------------
Adjusted Operating Profit(3)
from continuing operations 3.7 5.5 (31.4) 3.6 14.2
------------------------------------ ----------- ----------- ------- ------------- -------------
Statutory
------------------------------------ ----------- ----------- ------- ------------- -------------
Revenue from continuing operations 37.0 33.6 10.0 127.3 131.6
------------------------------------ ----------- ----------- ------- ------------- -------------
Loss before tax from continuing
operations (53.7) (1.0) (73.3) (8.4)
------------------------------------ ----------- ----------- ------- ------------- -------------
(Loss)/profit for the period
from continuing operations (53.2) (1.1) (73.3) 0.5
------------------------------------ ----------- ----------- ------- ------------- -------------
Loss for the period - total
incl. discontinued operations (61.5) (2.3) (83.1) (4.4)
------------------------------------ ----------- ----------- ------- ------------- -------------
Basic loss per share (p) (11.07) (0.51) (15.03) (0.94)
------------------------------------ ----------- ----------- ------- ------------- -------------
Net debt(4) (87.1) (55.7) (87.1) (55.7)
------------------------------------ ----------- ----------- ------- ------------- -------------
* 2018 numbers have been restated to reflect the ongoing
continuing business. Knowledge Services Division and the veterinary
services business within the Animal Health Division have been moved
to discontinued operations in line with IFRS 5.
Q4 Overview
-- As announced in the trading update of 29 November, the
Company has accelerated its programme of disposals and
restructuring, and as a result, certain activities, primarily the
Knowledge Services division and the veterinary services business in
Animal Health, have been classified as discontinued operations.
-- Revenue from continuing operations of GBP37.0m was 10% above
the prior year (Q4 2018: GBP33.6m) driven by strong growth in
Genetics versus the same period last year.
-- Adjusted EBITDA(2) from continuing operations was up 7% at
GBP7.5m (Q4 2018: GBP7.0m), driven by increased revenues in the
period vs the prior year.
-- Adjusted EBITDA(2) margin 20% (Q4 2018: 21%) with growth in
gross profit offset by step up in operating costs
-- Impairment of acquired intangibles in Advanced Nutrition of
GBP44.8m as a result of a reduction in forecasts due to a material
change in market outlook (impairing INVE).
-- Impairment of tangible and intangible assets related to discontinued operations of GBP6.9m
-- Statutory loss for the period including discontinued
operations of GBP61.5m (2018: loss of GBP2.3m), primarily as a
result of the impairments (including discontinued operations); as
well as an increase in depreciation, amortisation, finance costs
and exceptional costs
-- The weakness in the shrimp and sea bass/sea bream markets continued during the period.
Q4 Divisional overview
-- Genetics reported revenue growth of 60% against Q4 last year
as a result of higher salmon egg sales supported by the Salten
facility coming onstream and the export ban of all salmon eggs from
Norway which benefitted StofnFiskur in the period. Revenues in the
quarter were GBP10.0m (2018: GBP6.2m). Adjusted EBITDA for the
division was GBP4.3m (Q42018: GBP3.3m).
-- Advanced Nutrition delivered revenues of GBP22.3m (Q42018:
GBP21.5m), as a result of higher GSL Artemia volumes, the launch of
D-FENSE vibrio inhibiting Artemia in Vietnam and higher volumes in
Health, partly offset by lower volumes of non GSL eggs and lower
Diets sales mainly in Greece. Adjusted EBITDA was 18% up at GBP4.5m
(Q42018: GBP3.8m) helped by one off income from the settlement of
infringement cases and the profit on disposal of a property in
China which together totalled GBP1.1m.
-- Revenues in Animal Health (including Discontinued Operations
of veterinary and diagnostics) in Q4 were GBP6.6m, 13% below the
prior year (Q42018: GBP7.6m) as a result of lower contribution from
field trials partially offset by higher toll manufacturing
contribution (timing) and higher Salmosan sales and Adjusted EBITDA
was a loss of GBP0.8m (Q42018: loss GBP0.4m).
Full Year Overview
This morning the Company published its full year audited results
for the 12 months ended 30 September 2019 which can be found on
https://www.benchmarkplc.com
-- Revenues from Continuing Operations of GBP127.3m, 3% below prior year (2018: GBP131.6m)
-- Total revenues including Continuing and Discontinued
Operations of GBP148.7m, down 2% (2018: GBP151.5m)
-- Adjusted EBITDA(2) from Continuing Operations of GBP12.1m (2018: GBP19.1m)
-- Total Adjusted EBITDA(2) including Continuing and
Discontinued Operations of GBP13.7m (2018: GBP17.0m)
-- Total R&D investment of GBP20.5m (2018: GBP19.2m) driven
by products close to launch and investment in Genetics and Advanced
Nutrition to maintain leadership in our core markets
-- Net debt(3) at period end of GBP87.1m (2018: GBP55.7m) as a
result of investment in R&D and an increase in working capital
including that related to growth in biological assets in the new
production facilities
-- Year end liquidity(5) was GBP28.2m, well within the covenant threshold
-- Impairment of acquired intangibles in Advanced Nutrition of
GBP44.8m as a result of a reduction in forecasts due to a material
change in market outlook (impairing INVE).
-- Impairment of tangible and intangible assets related to discontinued operations of GBP7.5m
-- Current trading: Weakness in the shrimp and sea bass/sea
bream markets continues and while some recovery is expected, it is
unlikely to recover to 2018 levels in 2020. Overall the Company
expects to deliver underlying Adjusted EBITDA from Continuing
Operations (before one-off other income) in line with this year in
FY2020 and to maintain sufficient liquidity to execute its product
development programme and support its Continuing Operations after
taking account of the expected timing and proceeds from the planned
disposals and cost reductions
(1) EBITDA is earnings before interest, tax, depreciation and
amortisation and impairment.
(2) Adjusted EBITDA is EBITDA(1) , before exceptional items and
acquisition related expenditure.
(3) Adjusted Operating Profit is operating loss before
exceptional items including acquisition related items and
amortisation of intangible assets excluding development costs
(4) Net debt is cash and cash equivalents less loans and
borrowings.
(5) Liquidity is defined as undrawn facilities plus cash
balances.
Progress towards commercial launch of major products
-- Next generation sea lice treatment (product candidate BMK08)
continued to show c.99% efficacy and excellent environmental and
animal welfare credentials. In combination with CleanTreat(R),
BMK08 is potentially transformative, addressing one of the largest
industry challenges.
-- Production of specific pathogen resistant (SPR) shrimp
commenced in Florida for export into Asia. Entered into agreement
with two partners in Thailand for local multiplication and
distribution.
Growth in core markets
-- Opening of state of the art, land-based salmon egg facility
in Norway. Ramp-up of production according to plan
-- Establishment of wholly owned local production in Chile
following dissolution of JV with AquaChile. Recovery of original
investment which will be reinvested in the Chilean operation
-- Increased capacity at production plant in Thailand to meet
growing long term demand for the Company's specialist diets
Continued Innovation
-- Winner of Aquaculture Innovation Award for CleanTreat(R), the
Company's breakthrough purification system which removes medicinal
residues from bath treatments
-- Launch of a new Artemia product (D-FENSE) which reduces the
risk of infection from vibrio, one of the main industry challenges
affecting shrimp and seabass/seabream
Q4 Management Commentary
Q4 saw a continuation of the trends in Q3, with weak shrimp and
Mediterranean seabass/seabream markets having affected sales
volumes in Advanced Nutrition; Animal Health delivered lower than
anticipated contribution from trials of pre-licence products and
Genetics performed well with continued growth in salmon egg
sales.
During the period, the Company accelerated its programme of
disposals and restructuring, and certain activities were classified
as discontinued, primarily the Knowledge Services businesses and
the veterinary and diagnostics services business in Animal
Health.
Compared to the prior year, the results from Continuing
Operations in the quarter reflected good growth in salmon genetics
sales, a slightly higher revenue from Advanced Nutrition related to
timing of sales, and lower contribution from trials in Animal
Health. Revenue from continuing operations was GBP37.0m, 10% above
the prior year (Q4 2018: GBP33.6m). Adjusted EBITDA from continuing
operations was up 7% at GBP7.5m (Q4 2018: GBP7.0m), driven by
higher revenues.
The weak market conditions in Advanced Nutrition resulted in a
significant impairment of goodwill on acquisition of INVE of
GBP44.8m (2018: GBPnil). Furthermore, there were other impairment
charges on assets within discontinued operations of GBP7.5m (2018:
GBPnil). As a consequence, the statutory loss for the period
including discontinued operations was GBP61.5m (2018: loss
GBP2.3m), reflecting an increase in depreciation, amortisation,
finance costs and exceptional costs.
In addition, Peter George took over as Executive Chairman
following Malcolm Pye's resignation as CEO in August 2019. Septima
Maguire joined the Company post period end in November 2019 and was
appointed CFO on 20 December 2019.
Advanced Nutrition
Advanced Nutrition delivered revenues of GBP22.3m (Q42018:
GBP21.5m), as a result of higher GSL Artemia volumes, the launch of
D-FENSE vibrio inhibiting Artemia in Vietnam and higher volumes in
Health partly offset by lower volumes of non GSL eggs and lower
Diets sales mainly in Greece. Adjusted EBITDA was 18% up at GBP4.5m
(Q42018: GBP3.8m) helped by one off income from the settlement of
infringement cases and the profit on disposal of a property in
China which together totalled GBP1.1m.
Operationally, good progress was made in the launch of D-FENSE
vibrio inhibiting Artemia across markets, including ongoing trials
in several key markets, and first significant sales delivered. The
Company held a customer event in Crete, with seminars attended by
representatives from more than 90% of all Mediterranean seabass and
seabream hatcheries.
Genetics
Genetics revenues in Q4 were GBP10.0m, 60% above the prior year
(2018: GBP6.2m) driven by higher salmon egg sales as a result of
the Salten facility coming onstream and the countrywide export ban
of salmon eggs from Norway in the period which benefitted
StofnFiskur.
Gross profit in the period was favourably impacted by an
increase in the fair value of biological assets. Adjusted EBITDA
for the division was GBP4.3m (Q42018: GBP3.3m) with the Adjusted
EBITDA margin affected by higher operational costs compared to the
prior year from new ventures including Benchmark Chile, Salten and
the new SPR shrimp operation in Florida. Additionally, we incurred
legal fees in the termination of the joint venture and the
establishment of the wholly owned subsidiary in Chile in Q4
2019.
Operationally, for the first time the Company was able to supply
eggs from its SalmoBreed strain throughout the summer thanks to our
new biosecure facility in Salten.
Animal Health
Revenues in Animal Health (including Discontinued Operations of
veterinary and diagnostics) in Q4 were GBP6.6m, 13% below the prior
year (Q42018: GBP7.6m) as a result of lower contribution from field
trials partially offset by higher toll manufacturing contribution
(timing) and higher Salmosan sales and Adjusted EBITDA was a loss
of GBP0.8m (Q42018: loss GBP0.4m).
Operationally, during the period the Company completed the
fourth set of field trials in Norway with BMK08, achieving further
efficiency gains for CleanTreat(R) which won the Aqua-Nor
Innovation award in August 2019.
Activities in Knowledge Services were classified as
discontinued.
Full Year Management Commentary
Revenue and Adjusted EBITDA
Group
The Advanced Nutrition division experienced very challenging
market conditions in 2019 that led to a reduction in revenue, which
was partially offset by growth in Genetics and as a result Group
revenue from continuing operations decreased by 3% to GBP127.3m in
the year (2018: GBP131.6m). The reduction in sales meant that Gross
Profit from continuing operations decreased to GBP66.0m (2018:
GBP68.5m) and Gross Margin remaining steady at 52% (2018: 52%) as
prices remained relatively resilient albeit some price weakness was
experienced in certain live feed products. In addition, there was a
reduced contribution in Health from commercial scale field
trials.
Total Group operating costs of continuing operations increased
by 10% to GBP40.7m (2018: GBP37.0m). This increase reflects the
operating costs of new production sites as they come on stream,
increased costs related to currency transfers and a full year
impact of increased management headcount to strengthen the Plc and
Operations boards. Opex was reduced by other income of GBP1.8m
(2018: GBP1.0m), mainly from R&D expenditure credits and
proceeds from successful IP infringement cases. Expensed R&D of
continuing operations increased to GBP12.8m (2018: GBP12.0m) with
the increase being focussed on protecting the market positions of
the more mature Genetics and Advanced Nutrition divisions as well
as progressing the main pipeline opportunities in Animal
Health.
Adjusted EBITDA from continuing operations decreased by 37% to
GBP12.1m (2018: GBP19.1m) with the drop driven by lower sales in
Advanced Nutrition and lower contribution from commercial scale
field trials, offset by an increase in sales and margins in
Genetics and one-off other income. Adjusted Operating Profit from
continuing operations decreased to GBP3.6m (2018: GBP14.2m) due to
the lower trading result combined with increased depreciation
charges reflecting the contribution of the recently constructed
production assets.
Total revenues (including discontinued operations) were
GBP148.7m, down 2% (2018: GBP151.5m). Using the same foreign
exchange rates experienced in 2018 (constant currency(1) ) revenue
from continuing operations decreased by 3%. Total Adjusted EBITDA
(including discontinued operations) decreased by 19% to GBP13.7m
(2018: GBP17.0m).
Advanced Nutrition
Revenue of GBP76.8m was down 10% (2018: GBP85.7m) as a result of
weak markets and aggressive price competition from CIS Artemia
producers after a strong harvest. By product our live feed products
were the most affected with volumes and revenues (in USD) down 23%,
whilst specialist diets and health showed relative resilience with
revenues (in USD) down 5% and 4%, respectively.
Strategically we maintained our prices and our premium
positioning, which reflect our technical superiority. The weak
demand environment did result in the division absorbing some
increases in cost of sales and, while operating costs were tightly
controlled and benefitted from the profit on sale of a property and
the proceeds of IP infringement settlements, Advanced Nutrition
reported a reduced Adjusted EBITDA result of GBP15.4m (2018:
GBP21.6m) with a margin of 20% (2018: 25%). The weaker market
outlook has resulted in an impairment of GBP44.8m to the carrying
values of goodwill in the INVE business.
Genetics
Good growth in revenue and Adjusted EBITDA driven by an increase
in salmon egg volumes (+16%) and prices reflecting our continued
innovation and launch of new traits. Revenues of GBP39.7m were up
11% (2018: GBP35.8m), ahead of growth in the sector. The Company's
ongoing innovation together with its investment in quality,
biosecurity and availability of supply through our new production
facilities will support future growth. The dissolution of the joint
venture with AquaChile is now complete including transfer of
ownership of the Ensenada salmon egg hatchery which will form the
platform to establish Chilean production. The valuation of
biological assets increased by GBP8.3m (2018: GBP4.0m) driven by
the growth in sales in the year, the strong order book at the year
end and the increasing output potential of the new production
sites. As the division's new shrimp genetics get closer to market
launch the costs of development were capitalised for the first
time, with GBP1.5m capitalised in the year. These factors supported
growth in gross margins to 64% (2018: 58%). Operating costs
increased in line with the increase in production capacity in
salmon and shrimp. As a result, the division delivered strong
Adjusted EBITDA growth to GBP10.1m (2018: GBP7.9m) with Adjusted
EBITDA margin rising to 25% (2018: 22%).
Animal Health
Revenue of GBP17.7m up 10% (2018: GBP16.2m). Growth was driven
by an increase in sales of Salmosan, the Company's current sea lice
treatment. This reflects the challenge of high sea lice levels,
particularly in Chile. The Company continued to generate a
contribution from commercial scale field trials of its next
generation sea lice treatment (BMK08), although at a lower level
than the prior year, as we approach commercial launch and the
programme of trials in our main market reaches conclusion. Revenues
from veterinary and diagnostics services also grew during the
year.
Total R&D investment in the division was GBP11.2m (2018:
GBP12.2m), of which GBP5.7m was expensed (2018: GBP5.6m). During
the year the Company began a programme to reduce overall R&D
spend while continuing to progress the main pipeline opportunities.
This involved a streamlining of external R&D spend and a review
of in-house trials facilities. The impact from this effort will
come through from 2020 onwards.
Adjusted EBITDA loss narrowed for the division to GBP10.2m
(2018: loss of GBP11.0m).
Knowledge Services
All operations of the division are included within discontinued
operations. Revenue in this division in 2019 was GBP15.9m (2018:
GBP15.8m) with associated Adjusted EBITDA of GBP1.3m (2018:
GBP0.2m). Revenue was flat with a particularly strong performance
in veterinary training offset by reduced sales in other businesses.
Despite being broadly complementary to Benchmark's core activities,
the Knowledge Services division is not integral to the Group's
long-term strategy. Therefore, the disposal of the component
businesses is part of the programme of structural efficiencies. The
Company is in discussions with a number of interested parties and
further announcements will be made in due course.
Exceptional items
Items that are material because of their nature whose
significance is sufficient to warrant separate disclosure and
identification within the consolidated financial statements are
referred to as exceptional items. The separate reporting of
exceptional items helps to provide an understanding of the Group's
underlying performance. Exceptional expenses related to continuing
operations of GBP0.6m (2018: GBP1.2m) derive from the changes in
Group management. Exceptional expenses relating to discontinued
operations of GBP0.7m (2018: GBPnil) include costs of closure of
operations in the Knowledge Services division.
Depreciation, amortisation and impairments
Depreciation and impairments related to continuing operations of
GBP8.5m (2018: GBP4.9m) with the increase principally arising from
new production facilities coming onstream.
Amortisation and impairments related to continuing operations of
GBP64.3m (2018: GBP16.8m) with the increase being due to
impairments in the carrying value of goodwill related to the INVE
business driven by the change in market outlook.
Net finance costs
During the year the Company completed a new senior secured
floating rate bond issue of NOK 850m (USD 95.0m equivalent). The
bond which matures in June 2023, will be listed on the Oslo market
and has a coupon equivalent to the three months Norwegian Interbank
Offered Rate + 5.25% p.a. with quarterly interest payments. This
new bond issue was applied to refinance Benchmark's previous USD
90m revolving credit facility. In addition, a USD 15.0m revolving
credit facility was provided by DNB Bank ASA (50%) and HSBC UK Bank
PLC (50%). The revolving credit facility incurs interest in the
range of 3.0 to 3.5% over London Interbank Offered Rate. The
Group's other ring-fenced facilities remained in place including
facilities totalling NOK 291m related to the funding of the new
salmon egg production facility in Norway. Interest on these other
debt facilities ranges between 2.65% above Norwegian base rates and
5%.
The Group incurred net finance costs from continuing operations
of GBP12.1m during the year (2018: GBP4.6m). Included within this
was interest charged on the Group's interest-bearing debt
facilities of GBP6.0m (2018: GBP2.4m) reflecting a higher level of
net debt during the year and the higher coupon post refinancing.
Further, a foreign exchange loss of GBP4.6m arose due to the
movement in exchange rates and there was a charge of GBP1.7m (2018:
GBPnil) relating to the fair value change in the cross currency
hedge taken out during the year.
Statutory loss before tax
The loss before tax from continuing operations for the year at
GBP73.3m is higher than the prior year (2018: loss of GBP8.4m) due
to the impact of the reduced trading result; higher depreciation,
amortisation, and in particular impairment charges; and the
increase in finance costs and exceptional costs; all as outlined
above.
Taxation
There was a tax credit related to continuing operations in the
period of GBP13,000 (2018: credit of GBP8.9m), mainly due to
overseas tax charges in the Genetics division of GBP1.5m and in the
Advanced Nutrition division of GBP2.6m, offset by deferred tax
credits on intangible assets mainly arising on consolidation from
acquisitions (the 2018 credit principally related to a reduction in
the corporation tax rate in Belgium from 34% to 25%), recognition
of a deferred tax asset on losses expected to be recovered.
Loss for the year
The loss for the year from continuing operations was GBP73.3m
(2018: profit of GBP0.5m) and from discontinued operations the loss
was GBP9.8m (2018: loss of GBP4.9m).
Earnings per share
Basic loss and diluted loss per share were both -15.03p (2018:
loss per share -0.94p). The movement year on year is due to the
reduced result for the year as noted above.
Dividends
No dividends have been paid or proposed in the year (2018:
GBPnil) and the Board is not recommending a final dividend in
respect of the year ended 30 September 2019.
Biological assets
A feature of the Group's net assets is its investment in
biological assets, which under IAS 41 are stated at fair value. At
30 September 2019, the carrying value of biological assets was
GBP28.5m (2018: GBP20.4m). The movement in the overall carrying
value of biological assets is due principally to the increase in
sales of and future orders for the Company's salmon eggs as well as
expansion of own production.
Intangibles
Capitalised R&D increased by GBP0.5m to GBP7.7m (2018:
GBP7.2m). R&D costs related to products that are close to
commercial launch have to be capitalised when they meet the
requirements set out under IFRS. Increased activities related to
trials of and progress with the marketing authorisation application
for BMK08 pushed capitalised development costs higher, together
with the first time capitalisation of the new shrimp genetics. As
Benchmark goes through a period of an increasing number of new
products approaching launch this capitalisation will be an ongoing
feature in the mid-term.
The dissolution of the genetics joint venture in Chile, and the
consequent transfer of assets to Benchmark to part satisfy return
of the original investment, led to an intangible addition
representing the IP inherent within the breeding programme in
Chile.
The impairment of intangible assets during the year of GBP47.6m
principally relates to impairment of the goodwill from the
acquisition of INVE where the change in market outlook has led to a
reduction in value of the discounted cash flows for the Advanced
Nutrition division.
Capital expenditure
Tangible fixed asset additions of GBP12.5m (2018: GBP25.1m)
includes GBP1.0m cash investment in the final phase of the
construction of the new salmon egg production facility in Norway,
GBP4.1m initial investment in the new salmon egg production
facility in Chile (transferred on dissolution of the previous JV)
and GBP2.2m on improvements to salmon slaughter facilities in
Iceland that are a vital part of the egg production process.
Cash flow
Net cash flow from operations was an outflow of GBP9.2m (2018:
outflow of GBP3.7m) principally due to working capital increases:
in Advanced Nutrition from purchase commitments with key live feed
suppliers and in general the phasing of sales towards year end in
general. In addition, the build of biological assets at new
genetics production facilities resulted in an increased outflow in
working capital of GBP8.6m (2018: outflow of GBP4.1m).
Total outflows to capex of GBP15.8m (2018: GBP32.7m) were
substantially reduced because investment in the new salmon egg
facility concluded at the beginning of the year.
Other cashflow items included the payment of the deferred
consideration of GBP7.0m for the investment in the joint venture
with AquaChile which was completed in 2018 and the initial
consideration received on the subsequent dissolution of that joint
venture in 2019 of GBP5.9m. The balance of the consideration for
the dissolution of the joint venture of GBP6.9m was received post
year end.
As a result of the above free cash flow was an outflow of
GBP23.9m (2018: outflow of GBP36.2m). Net proceeds from increased
borrowings of GBP21.4m were used to fund this outflow.
Cash at the period end stood at GBP16.1m (2018: GBP24.1m).
Liquidity and net debt
The Group's finance function is responsible for sourcing and
structuring borrowing requirements.
As detailed under net finance costs above, during the year the
Company completed a refinancing including a new senior secured
floating rate bond issue of NOK 850m (USD 95.0m equivalent) and a
USD 15.0m revolving credit facility. The Group's other ring-fenced
facilities remained in place including facilities totalling NOK
291m related to the funding of the new salmon egg production
facility in Norway.
The Group had GBP103.2m in bank borrowings at the end of the
year (2018: GBP79.7m). Reported debt includes GBP27.1m in relation
to the funding of the Group's new salmon egg production facility in
Norway. This is ring-fenced debt within SalmoBreed Salten without
recourse to the rest of the Group. At the year end a maximum of
GBP12.2m was available on the Group's super senior revolving credit
facility, of this GBPnil had been drawn. Net debt increased to
GBP87.1m during the year (2018: GBP55.7m) as investment in working
capital expanded and available long-term capital was invested in
R&D and production capacity.
As outlined in the Basis of Preparation in Note 1 to the
financial statements, there is an information undertaking within
the terms of the NOK bond that requires the Company to publish
quarterly financial statements within 60 days of the quarter end.
The Company did not satisfy this requirement for the quarter to 30
September 2019 because the year end audit was not sufficiently
complete for the publication of what would have effectively been
deemed a Preliminary Announcement by reference to the UK Listing
Rules. The NOK bond terms include permission for the Company to
publish the quarterly financials within 20 business days of the end
of the initial 60 day period.The Company satisfied the requirements
of the NOK bond terms by announcing its quarterly financials
simultaneously with the announcement of its preliminary results for
the year ended 30 September 2019 on 20 December 2019.
The facilities combined with the year end cash balance of
GBP16.1m means the Group had total liquidity of GBP28.2m. This, in
conjunction with the expected proceeds from the disposal of
non-core businesses and the reduction in cash outflows resulting
from closing certain non-core activities is expected by the
Directors to provide the Group with sufficient liquidity to fund
continuing growth and provide adequate headroom.
Going concern
The accounts for 2019 have been prepared on a going concern
basis. The forecast projections of the Group's performance for the
period to September 2021 have been reviewed by the Directors and
the Board has concluded that, while there is a material uncertainty
that may cast significant doubt upon the ability to continue as a
going concern, subject to the successful disposal of the
discontinued operations in the near-term or, in the absence of
this, to appropriate actions being taken to significantly reduce
investment in and costs related to the product pipeline or further
funding being sought, the Group should be able to continue in
operation and meet its liabilities as they fall due over the period
considered.
Unaudited Quarterly Financial Statements
Consolidated Income Statement
YTD 2018
Q4 2019 Q4 2018 YTD 2019 Restated*
All figures in GBP000's Notes (unaudited) (unaudited) (audited) (audited)
----------------------------------------- ------- -------------- -------------- ------------ ------------
Revenue 36,978 33,618 127,343 131,643
Cost of sales (15,344) (14,085) (61,348) (63,150)
--------------------------------------------------
Gross profit 21,634 19,533 65,995 68,493
Research and development costs (3,602) (3,505) (12,830) (12,040)
Other operating costs (10,577) (8,845) (40,700) (37,012)
Share of loss of equity-accounted
investees, net of tax 18 (189) (414) (362)
-------------------------------------------------- -------------- -------------- ------------ ------------
Adjusted EBITDA(2) 7,473 6,994 12,051 19,079
Exceptional - restructuring/acquisition
related items (530) (333) (581) (1,239)
-------------------------------------------------- -------------- -------------- ------------ ------------
EBITDA(1) 6,943 6,661 11,470 17,840
Depreciation and impairment (3,726) (1,533) (8,466) (4,869)
Amortisation and impairment (51,486) (4,252) (64,254) (16,802)
-------------------------------------------------- -------------- -------------- ------------ ------------
Operating (loss) / profit (48,269) 876 (61,250) (3,831)
Finance cost (5,489) (2,098) (12,422) (4,927)
Finance income 81 214 368 332
-------------------------------------------------- -------------- -------------- ------------ ------------
Loss before taxation (53,677) (1,008) (73,304) (8,426)
Tax on loss 456 (131) 13 8,906
-------------------------------------------------- -------------- ------------
(Loss)/profit from continuing
operations (53,221) (1,139) (73,291) 480
-------------------------------------------------- -------------- -------------- ------------ ------------
Discontinued operations
Loss from discontinued operations,
net of tax (8,278) (1,156) (9,789) (4,869)
-------------------------------------------------- -------------- -------------- ------------ ------------
(61,499) (2,295) (83,080) (4,389)
------------------------------------------------- -------------- -------------- ------------ ------------
Loss for the year attributable
to:
- Owners of the parent (61,809) (2,837) (83,857) (5,009)
- Non-controlling interest 310 542 777 620
-------------------------------------------------- --------------
(61,499) (2,295) (83,080) (4,389)
------------------------------------------------- -------------- -------------- ------------ ------------
Earnings per share
Basic loss per share (pence) (11.07) (0.51) (15.03) (0.94)
Diluted loss per share (pence) (11.07) (0.51) (15.03) (0.94)
Earnings per share - continuing
operations
Basic loss per share (pence) (9.59) (0.30) (13.28) (0.03)
Diluted loss per share (pence) (9.59) (0.30) (13.28) (0.03)
Adjusted EBITDA from continuing
operations 7,473 6,994 12,051 19,079
Adjusted EBITDA from discontinued
operations (99) (911) 1,674 (2,061)
-------------------------------------------------- -------------- -------------- ------------ ------------
Total Adjusted EBITDA 7,374 6,083 13,725 17,018
-------------------------------------------------- -------------- -------------- ------------ ------------
1 EBITDA - Earnings before interest, tax, depreciation and
amortisation
2 Adjusted EBITDA - EBITDA before exceptional and acquisition
related items
* 2018 numbers have been restated to reflect the ongoing
continuing business. Knowledge Services Division and the veterinary
services business within the Animal Health Division have been moved
to discontinued operations in line with IFRS 5.
Consolidated Statement of Comprehensive Income
Q4 2019 Q4 2018 YTD 2019 YTD 2018
All figures in GBP000's (unaudited) (unaudited) (audited) (audited)
------------------------------------------ --- -------------- -------------- ------------ ------------
Loss for the period (61,499) (2,295) (83,080) (4,389)
Other comprehensive income
Items that are or may be reclassified
subsequently to profit or loss
Foreign exchange translation differences 9,424 2,505 13,919 7,624
Cash flow hedges - changes in fair
value (2,615) - (3,549) -
Cash flow hedges - reclassified to
profit or loss (10) - (17) -
Total comprehensive income for the
period (54,700) 210 (72,727) 3,235
----------------------------------------------- -------------- -------------- ------------ ------------
Total comprehensive income for the period attributable to:
- Owners of the parent (54,924) (313) (73,174) 2,546
- Non-controlling interest 224 523 447 689
----------------------------------------------- ------------ ------------
(54,700) 210 (72,727) 3,235
---------------------------------------------- -------------- -------------- ------------ ------------
.
Total comprehensive income for the period attributable to owners
of the parent:
- Continuing operations (47,186) 534 (63,188) 7,048
- Discontinued operations (7,738) (847) (9,986) (4,502)
-----------------------------------------------
(54,924) (313) (73,174) 2,546
---------------------------------------------- -------------- -------------- ------------ ------------
Consolidated Balance Sheet
as at 30 September 2019
30 September 30 September
2019 2018
All figures in GBP000's (audited) (audited)
------------------------------------------ -------------- --------------
Assets
Property, plant and equipment 88,900 99,527
Intangible assets 275,744 325,386
Equity-accounted investees 3,453 17,457
Other investments 25 29
Biological and agricultural assets 12,469 8,502
Trade and other receivables - 4,145
Non-current assets 380,591 455,046
------------------------------------------- -------------- --------------
Inventories 22,609 20,483
Biological and agricultural assets 16,024 11,892
Trade and other receivables 52,136 41,337
Cash and cash equivalents 16,051 24,090
------------------------------------------- -------------- --------------
106,820 97,802
Assets held for sale 15,970 -
Current assets 122,790 97,802
------------------------------------------- -------------- --------------
Total assets 503,381 552,848
------------------------------------------- -------------- --------------
Liabilities
Trade and other payables (35,235) (45,680)
Loans and borrowings (3,231) (898)
Corporation tax liability (2,703) (2,629)
Provisions (404) (70)
------------------------------------------- -------------- --------------
(41,573) (49,277)
Liabilities directly associated with (10,634) -
the assets held for sale
Current liabilities (52,207) (49,277)
------------------------------------------- -------------- --------------
Loans and borrowings (99,961) (78,868)
Other payables (2,004) (1,219)
Deferred tax (38,743) (41,637)
Non-current liabilities (140,708) (121,724)
------------------------------------------- -------------- --------------
Total liabilities (192,915) (171,001)
------------------------------------------- -------------- --------------
Net assets 310,466 381,847
------------------------------------------- -------------- --------------
Issued capital and reserves attributable
to owners of the parent
Share capital 559 557
Additional paid-in capital 358,044 357,894
Capital redemption reserve 5 5
Retained earnings (110,916) (28,240)
Hedging reserve (3,566) -
Foreign exchange reserve 60,202 45,953
Equity attributable to owners of the
parent 304,328 376,169
Non-controlling interest 6,138 5,678
-------------------------------------------
Total equity and reserves 310,466 381,847
------------------------------------------- -------------- --------------
Consolidated Statement of Changes in Equity
for the year ended 30 September 2019
Total
attributable
to equity
Share holders Non-
All figures in Share premium Other Hedging Retained of controlling Total
GBP000's capital reserve reserves reserve earnings parent interest equity
--------------- ---------- ---------- ---------- ---------- ----------- -------------- ------------- ---------
As at 30
September
2017
(audited) 522 339,431 38,403 - (24,742) 353,614 4,971 358,585
--------------- ---------- ---------- ---------- ---------- ----------- -------------- ------------- ---------
Comprehensive
income
for the year
(Loss)/profit
for the
year - - - - (5,009) (5,009) 620 (4,389)
Other
comprehensive
income - - 7,555 - - 7,555 69 7,624
Total
comprehensive
income for
the year - - 7,555 - (5,009) 2,546 689 3,235
--------------- ---------- ---------- ---------- ---------- ----------- -------------- ------------- ---------
Contributions
by and
distributions
to owners
Share issue 35 18,463 - - - 18,498 - 18,498
Share based
payment - - - - 1,511 1,511 - 1,511
Total
contributions
by and
distributions
to owners 35 18,463 - - 1,511 20,009 - 20,009
--------------- ---------- ---------- ---------- ---------- ----------- -------------- ------------- ---------
Changes in
ownership
Acquisition of
NCI
without a
change in
control - - - - - - 18 18
Total changes
in ownership
interests - - - - - - 18 18
Total
transactions
with owners
of the
Company 35 18,463 - - 1,511 20,009 18 20,027
--------------- ---------- ---------- ---------- ---------- ----------- -------------- ------------- ---------
As at 30
September
2018
(audited) 557 357,894 45,958 - (28,240) 376,169 5,678 381,847
--------------- ---------- ---------- ---------- ---------- ----------- -------------- ------------- ---------
Comprehensive
income
for the period
(Loss)/profit
for the
period - - - - (83,857) (83,857) 777 (83,080)
Other
comprehensive
income - - 14,249 (3,566) - 10,683 (330) 10,353
Total
comprehensive
income for
the period - - 14,249 (3,566) (83,857) (73,174) 447 (72,727)
--------------- ---------- ---------- ---------- ---------- ----------- -------------- ------------- ---------
Contributions
by and
distributions
to owners
Share issue 2 150 - - - 152 - 152
Share based
payment - - - - 1,181 1,181 - 1,181
Total
contributions
by and
distributions
to owners 2 150 - - 1,181 1,333 - 1,333
--------------- ---------- ---------- ---------- ---------- ----------- -------------- ------------- ---------
Changes in
ownership
Disposal of
subsidiary
with NCI - - - - - - 13 13
Total changes
in ownership
interests - - - - - - 13 13
Total
transactions
with owners
of the
Company 2 150 - - 1,181 1,333 13 1,346
--------------- ---------- ---------- ---------- ---------- ----------- -------------- ------------- ---------
As at 30
September
2019
(audited) 559 358,044 60,207 (3,566) (110,916) 304,328 6,138 310,466
--------------- ---------- ---------- ---------- ---------- ----------- -------------- ------------- ---------
Consolidated Statement of Cash Flows
All figures in GBP000's YTD 2019 YTD 2018
(audited) (audited)
------------------------------------------- --- ------------ ------------
Cash flows from operating activities
Loss for the period (83,080) (4,389)
Adjustments for:
Depreciation and impairment of property,
plant and equipment 17,227 6,841
Amortisation and impairment of intangible
fixed assets 66,087 18,002
Loss on sale of property, plant and
equipment (838) 8
Finance income (368) (332)
Finance costs 7,773 2,432
Other adjustments for non-cash items 68 (1,931)
Share of profit of equity-accounted
investees, net of tax 414 362
Foreign exchange losses 5,620 2,609
Share based payment expense 1,181 1,511
Tax credit 111 (9,270)
------------------------------------------------ ------------ ------------
14,195 15,843
Increase in trade and other receivables (12,516) (4,355)
Increase in inventories (2,273) (815)
Increase in biological and agricultural
assets (8,593) (4,102)
Increase/(decrease) in trade and
other payables 3,968 (4,026)
Increase/(decrease) in provisions 261 (388)
------------------------------------------------ ------------ ------------
(4,958) 2,157
Income taxes paid (4,253) (5,898)
------------------------------------------------ ------------ ------------
Net cash flows used in operating
activities (9,211) (3,741)
------------------------------------------------ ------------ ------------
Investing activities
Acquisition of subsidiaries, net
of cash acquired (7) -
Purchase of investments (7,020) (6,356)
Receipts from disposal of investments 5,942 -
Purchases of property, plant and
equipment (7,850) (25,072)
Purchase of intangibles (7,964) (7,581)
Proceeds from sale of fixed assets 1,131 233
Interest received 447 261
------------------------------------------------ ------------ ------------
Net cash flows used in investing
activities (15,321) (38,515)
------------------------------------------------ ------------ ------------
Financing activities
Proceeds of share issues 2 18,498
Proceeds from bank or other borrowings 92,578 41,206
Acquisition of NCI - (33)
Repayment of bank or other borrowings (71,224) (5,815)
Cash advances and loans made to other
parties - (4,076)
Interest and finance charges paid (5,366) (2,442)
Payments to finance lease creditors (5) (218)
Net cash inflow from financing activities 15,985 47,120
------------------------------------------------ ------------ ------------
Net (decrease)/increase in cash and
cash equivalents (8,547) 4,864
Cash and cash equivalents at beginning
of period 24,090 18,779
Effect of movements in exchange rate 508 447
------------------------------------------------ ------------ ------------
Cash and cash equivalents at end
of period 16,051 24,090
------------------------------------------------ ------------ ------------
Notes
1. Basis of preparation
These unaudited quarterly results have been prepared on the
basis of the accounting policies which are to be set out in
Benchmark Holdings Plc's annual report and financial statements for
the year ended 30 September 2019.
The consolidated financial statements of the Group for the year
ended 30 September 2019 were prepared in accordance with
International Financial Reporting Standards ("IFRSs") as adopted
for use in the EU ("adopted IFRSs") and applicable law.
Whilst the financial information included in this preliminary
interim statement has been prepared on the basis of the
requirements of IFRSs in issue, as adopted by the European Union
and effective at 30 September 2019, this statement does not itself
contain sufficient information to comply with IFRS.
The financial information set out above does not constitute the
company's statutory accounts for the years ended 30 September 2019
or 2018. Statutory accounts for 2018 have been delivered to the
registrar of companies, and those for 2019 will be delivered in due
course. The auditor has reported on those accounts. Their report
for 2019 was (i) unqualified, (ii) contains a material uncertainty
in respect of going concern to which the auditor drew attention by
way of emphasis without modifying their report and (iii) did not
contain a statement under section 498(2) or (3) of the Companies
Act 2006. Their report for the accounts of 2018 was (i)
unqualified, (ii) did not include a reference of any matters to
which the auditor drew attention by way of emphasis without
qualifying their report and (iii) did not contain a statement under
section 498(2) or (3) of the Companies Act 2006.
The financial statements are prepared on the going concern
basis.
As at 30 September 2019 the Group had net assets of GBP310.5m
(2018: GBP381.8m), including cash of GBP16.1m (2018: GBP24.1m) as
set out in the consolidated balance sheet. The Group made a loss
for the year of GBP83.1m (2018: GBP4.4m). As at 30 September 2019
the Company had net assets of GBP304.2m (2018: GBP341.5m),
including cash of GBP0.8m (2018: GBP2.3m. The Company made a loss
for the year of GBP35.2m (2018: GBP8.6m).
The Group was refinanced during the year, and on 24 June 2019 a
new four-year senior secured floating rate listed bond issue of NOK
850m was completed and a new three and a half year USD 15m
revolving credit facility agreed. As at 20 December total
borrowings from the Group's facilities were GBP102.3m and the most
recent month end cash reserves at the end of November were
GBP19.8m.
The Directors have prepared base and sensitised cash flow
forecasts for the Group covering the period to September 2021,
including forecast compliance with the covenants specified in the
new borrowings. Significant elements of the Group continue to be in
a growth and investment phase, including the final stages of
obtaining Marketing Authority approval for its latest sea lice
treatment and the growth and expansion of its genetics business
into inland salmon egg production and disease resistant shrimp
genetics while riding out the headwinds in the shrimp market. The
Directors have taken the decision to divest from a number of
smaller or non-core businesses in the Group to help fund this
ongoing investment and a structural efficiencies programme is well
underway to that end. The business forecasts therefore include key
assumptions on the timing and value of these business disposals and
asset realisations, as well as other trading uncertainties common
in businesses engaged in the aquaculture and research and
development industries. The trading uncertainties include the
timing of the grant of full licences for the new sea lice
treatment, the pace of recovery in global shrimp markets, achieving
anticipated growth targets in core Advanced Nutrition and Genetics
markets, the supply and pricing of key raw materials, and potential
distribution partner agreements. However good progress has been
made with all of the disposals subject to the non-core divestment
programme, with several reaching the non-binding offer stage and
offers received reflecting a high level of interest.
The Directors have considered reasonably possible downside
sensitivity scenarios, including mitigating actions within their
control, should these occur around deferring and reducing
non-essential capital and revenue expenditure and working capital
management. These forecast cash flows, considering the ability and
intention of the directors to implement mitigating actions should
they be required, provide sufficient headroom in the forecast
period. However, should the reasonably possible downside
sensitivities from trading occur, alongside a significant delay or
a reduction in the expected disposal proceeds below the low end of
the valuation range in some of the larger business disposals, then
this could remove all available headroom. In this event, either
further financing would have to be sought or additional structural
efficiency initiatives be identified and pursued. In the
eventuality that further financing is required, the Directors
believe that relationships with funders and the expected returns
available on the growth areas within the Group in which ongoing
investment is being made are sufficiently strong and attractive for
the Group to be able to secure adequate additional funding should
it be required.
Based on their assessment, the Directors believe it remains
appropriate to prepare the financial statements on a going concern
basis. However, these circumstances represent a material
uncertainty that may cast significant doubt on the Group's and
Company's ability to continue as a going concern and therefore to
continue realising their assets and discharging its liabilities in
the normal course of business. The financial statements do not
include any adjustments that would result from the basis of
preparation being inappropriate.
This information has been approved for issue by the Board of
Directors of Benchmark Holdings plc, a company domiciled and
incorporated in the United Kingdom.
2 Segment information
Operating segments are reported in a manner consistent with the
reports made to the chief operating decision maker. It is
considered that the role of chief operating decision maker is
performed by the Board of Directors.
The Group operates globally and for management purposes is
organised into reportable segments as follows:
-- Animal Health Division - provides veterinary services,
environmental services diagnostics and animal health products to
global aquaculture, and manufactures licenced veterinary vaccines
and vaccine components;
-- Benchmark Genetics Division - harnesses industry leading
salmon breeding technologies combined with state-of-the-art
production facilities to provide a range of year-round high genetic
merit ova;
-- Advanced Animal Nutrition Division - manufactures and
provides technically advanced nutrition and health products to the
global aquaculture industry.
In addition to the above, reported as "all other segments" is
the Knowledge Services division. The division provides sustainable
food production consultancy, technical consultancy and assurance
services and promotes sustainable food production and ethics
through online news and technical publications for the
international agriculture and food processing sectors and through
delivery of training courses to the industries.
In order to reconcile the segmental analysis to the Consolidated
Income Statement, Corporate and Inter-segment sales are also shown.
Corporate represents revenues earned from recharging certain
central costs to the operating divisions, together with unallocated
central costs.
Measurement of operating segment profit or loss
Inter-segment sales are priced along the same lines as sales to
external customers, with an appropriate discount being applied to
encourage use of Group resources at a rate acceptable to local tax
authorities. This policy was applied consistently throughout the
current and prior period.
Segmental Revenue
Q4 2019 Q4 2018 YTD 2019 YTD 2018
All figures in GBP000's (unaudited) (unaudited) (audited) (audited)
---------------------------- --------------- --------------- ------------- -------------
Animal Health 6,618 7,634 17,742 16,153
Genetics 9,978 6,234 39,696 35,755
Advanced Animal Nutrition 22,288 21,495 76,776 85,746
All other segments 3,262 3,527 15,881 15,786
Corporate 1,505 1,489 6,534 5,277
Inter-segment sales (1,822) (2,008) (7,890) (7,250)
Total 41,829 38,371 148,739 151,467
---------------------------- --------------- --------------- ------------- -------------
Segmental Adjusted EBITDA
Q4 2019 Q4 2018 YTD 2019 YTD 2018
All figures in GBP000's (unaudited) (unaudited) (audited) (audited)
---------------------------- --------------- --------------- ------------- -------------
Animal Health (848) (375) (10,197) (10,992)
Genetics 4,335 3,317 10,075 7,871
Advanced Animal Nutrition 4,479 3,795 15,406 21,627
All other segments 301 (250) 1,264 203
Corporate (893) (404) (2,823) (1,795)
Inter-company - - - 104
Total 7,374 6,083 13,725 17,018
---------------------------- --------------- --------------- ------------- -------------
Reconciliations of segmental information to IFRS measures
Revenue
Q4 2019 Q4 2018 YTD 2019 YTD 2018
All figures in GBP000's (unaudited) (unaudited) (audited) (audited)
--------------------------------- --------------- --------------- ------------- -------------
Total revenue per segmental
information 41,829 38,371 148,739 151,467
Less: revenue from discontinued
operations (4,851) (4,753) (21,396) (19,824)
---------------------------------
Consolidated revenue 36,978 33,618 127,343 131,643
--------------------------------- --------------- --------------- ------------- -------------
Reconciliation of Reportable Segments Adjusted EBITDA to Loss
before taxation from continuing operations
YTD
Q4 2019 Q4 2018 2019 YTD 2018
All figures in GBP000's (unaudited) (unaudited) (audited) (audited)
------------------------------------------ --------------- --------------- ------------- -------------
Total reportable segment Adjusted
EBITDA 7,966 6,737 15,284 18,506
Other Segment and Corporate
Adjusted EBITDA (592) (654) (1,559) (1,488)
------------------------------------------ --------------- --------------- ------------- -------------
7,374 6,083 13,725 17,018
Less: Adjusted EBITDA from discontinued
operations 99 911 (1,674) 2,061
------------------------------------------ --------------- --------------- ------------- -------------
Adjusted EBITDA from continuing
operations 7,473 6,994 12,051 19,079
Exceptional including acquisition
related items (530) (333) (581) (1,239)
Depreciation and impairment (3,726) (1,533) (8,466) (4,869)
Amortisation and impairment (51,486) (4,252) (64,254) (16,802)
Net finance costs (5,408) (1,884) (12,054) (4,595)
Loss before taxation from continuing
operations (53,677) (1,008) (73,304) (8,426)
------------------------------------------ --------------- --------------- ------------- -------------
3 Impairment of goodwill and other intangible assets
Goodwill acquired in a business combination is allocated, at
acquisition, to the cash generating units (CGUs) that are expected
to benefit from the business combination. The Group tests goodwill
annually for impairment, or more frequently if there are
indications that goodwill might be impaired.
Goodwill arises across all of the Group's operating segments,
and is allocated specifically against the following CGUs:
Animal Advanced Knowledge
Health Genetics Animal Nutrition Services Total
2019 2019 2019 2019 2019
GBP000 GBP000 GBP000 GBP000 GBP000
---------------------------- -------- --------- ------------------ ---------- --------
Benchmark Vaccines Limited 432 - - - 432
Salmobreed AS - 7,065 - - 7,065
Stofnfiskur HF - 13,146 - - 13,146
Akvaforsk Genetic Center* - 8,691 - - 8,691
INVE Aquaculture Group - - 79,248 - 79,248
-------- --------- ------------------ ---------- --------
432 28,902 79,248 - 108,582
---------------------------- -------- --------- ------------------ ---------- --------
*Includes goodwill arising from the joint acquisition of
Akvaforsk Genetics Center AS (which was transferred into Benchmark
Genetics Norway) in the year and Benchmark Genetics USA (formerly
Akvaforsk Genetics Center Inc.)
Animal Advanced Knowledge Total
Health Genetics Animal Nutrition Services
2018 2018 2018 2018 2018
GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------- -------- --------- ------------------ ---------- --------
FVG Limited 288 - - - 288
Benchmark Vaccines Limited 432 - - - 432
Atlantic Veterinary Services
Limited 167 - - - 167
Salmobreed AS - 7,435 - - 7,435
Stofnfiskur HF - 13,874 - - 13,874
Akvaforsk Genetic Center* - 9,194 - - 9,194
INVE Aquaculture Group - - 117,117 - 117,117
FAI do Brasil Criacao Animal
Ltda - - - 96 96
FAI Aquaculture Limited - - - 450 450
5M Enterprises Limited - - - 379 379
Improve International Limited - - - 2,995 2,995
Improve International GmbH - - - 12 12
------------------------------- -------- --------- ------------------ ---------- --------
887 30,503 117,117 3,932 152,439
------------------------------- -------- --------- ------------------ ---------- --------
*Includes goodwill arising from the joint acquisition of
Akvaforsk Genetics Center AS (which was transferred into Benchmark
Genetics Norway) in the year and Benchmark Genetics USA (formerly
Akvaforsk Genetics Center Inc.)
The recoverable amounts of the above CGUs, with the exception of
the Knowledge Services, the operations of which are discontinued,
have been determined from value in use calculations. These
calculations used board approved cash flow projections from
five-year business plans based on actual operating results and
current forecasts. These forecasts were then extrapolated into
perpetuity taking account of specific terminal growth rates for
future cash flows, using individual business operating margins
based on past experience and future expectations in light of
anticipated economic and market conditions. The pre-tax cashflows
that these projections produced were discounted at pre-tax discount
rates based on the Group's beta adjusted cost of capital reflecting
management's assessment of specific risks related to each cash
generating unit. Specific assumptions used are as follows.
Animal Health
The pre-tax cashflows from the five-year projections were
discounted using a pre-tax discount rate of 13.1% (2018: 12.4%). An
assumed CAGR of revenue of 49% (2018: 77%) in the five-year plan
(2018: three-year plan) reflects the importance of the launch and
commercialisation of the division's new sea lice treatment in the
forecast period. A long-term growth rate of 2.5% (2018: 2.5%) has
been used to extrapolate the terminal year cashflow into
perpetuity.
The valuation of the Animal Health cash generating unit
indicates sufficient headroom such that a reasonably possible
change to key assumptions is unlikely to result in an impairment in
related goodwill. However, should the division's new sea lice
treatment not be successfully launched and commercialised, then
impairment of the goodwill and other intangible assets could be
possible.
Genetics
The pre-tax cashflows from the five-year projections were
discounted using a pre-tax discount rate of 12.1% (2018: 11.2%).
CAGR of revenue of 15% (2018: 18%) is implied by the five-year plan
(2018: three-year plan), and a long-term growth rate of 2.5% (2018:
2.5%) has been used to extrapolate the terminal year cashflow into
perpetuity.
Sensitivity testing of the recoverable amount to reasonably
possible changes in key assumptions has been performed. All other
assumptions being unchanged, an increase in the pre-tax discount
rate to 15.2% would reduce the headroom on the Genetics CGU to nil.
Should the discount rate increase further than this, then an
impairment of the goodwill would be likely.
Advanced Animal Nutrition
The continued aggressive shrimp market conditions being
experienced during the year and the expectation of a slower
longer-term recovery in that market led to a reduction in the
recoverable value of the CGU. The pre-tax cashflows from the
five-year projections were discounted using a pre-tax discount rate
of 11.5% (2018: 11.2%). CAGR of revenue of 12% (2018: 9%) is
implied by the five-year plan, with the rate reflecting a
particularly low year in FY19 and the recovery back to previous
year's levels as well as growth from new products. Long term growth
rate of 3.5% (2018: 4.0%) has been used to extrapolate the terminal
year cashflow into perpetuity.
Following this review, the value in use calculation for the CGU
showed GBP242m and a resulting impairment charge of GBP44.8m was
made to the carrying value of the goodwill. Management believes the
longer-term market value to be higher than this but are unable to
test this in the market given the current stage of the cycle of the
shrimp market.
The value in use assessment is sensitive to changes in the key
assumptions used. Sensitivity analysis was performed and a
reasonably likely downside scenario reflecting a slower recovery of
the shrimp market and a reduced growth rate in the five-year plan
for new products. This reasonably likely downside scenario includes
a 5% reduction in FY20 revenue and CAGR of revenue of 10%. This
would likely cause further impairment of GBP13.2m.
Knowledge Services
Following the decision to pursue the Structural Efficiencies
programme, the Knowledge Services CGU is discontinuing. The
goodwill for 5M Enterprises Limited, Improve International Limited,
Improve International GmbH have been transferred into Assets Held
for Sale. The goodwill for FAI do Brasil Criacao Animal Ltda and
FAI Aquaculture Limited no longer has any value and has been fully
impaired.
4 Discontinued activities
In June 2019 the Group announced a programme of structural
efficiencies which focused on the disposal and discontinuation of
non-core activities. This programme primarily includes the
businesses of Knowledge Services Division and the veterinary
services business within Animal Health Division.
Consequently, these operations have been classified as
discontinued and part of the disposal group is presented as held
for sale. The disposal group includes assets and liabilities within
the Knowledge Services and Animal Health segments. The comparative
consolidated statement of profit or loss and OCI has been
represented to show the discontinued operations separately from
continuing operations.
The disposals, together with the cost reduction/cost containment
plan and enhanced working capital management will allow the Company
to reallocate resources to priority revenue generating strategic
projects and to maintain adequate headroom. The timing and proceeds
from these actions are fundamental to maintain sufficient liquidity
to execute the Group's product development programme and to support
its Continuing Operations.
Significant progress to sell the disposal group has been made
and sales are expected to complete within the first half of the
financial year 2020.
Impairment losses relating to the disposal group
Impairment losses of GBP7,533,000 for write downs of
discontinued operations to the lower of carrying amount and its
fair value less costs to sell have been included in the
"Depreciation and impairment" and "Amortisation and impairment"
headings within discontinued operations. The impairment losses have
been applied to reduce the carrying amount of Intangible assets and
property, plant and equipment.
Results from discontinued operations
Q4 2019 Q4 2018 YTD 2019 YTD 2018
All figures in GBP000's (unaudited) (unaudited) (audited) (audited)
----------------------------------------- --- -------------- -------------- ------------ ------------
Revenue 4,851 4,753 21,396 19,824
Cost of sales (2,888) (3,549) (11,580) (14,297)
----------------------------------------------
Gross profit 1,963 1,204 9,816 5,527
Research and development costs (5) - (20) -
Other operating costs (2,057) (2,115) (8,122) (7,588)
---------------------------------------------- -------------- -------------- ------------ ------------
Adjusted EBITDA (99) (911) 1,674 (2,061)
Exceptional - restructuring/acquisition
related items (434) - (745) -
---------------------------------------------- -------------- -------------- ------------ ------------
EBITDA (533) (911) 929 (2,061)
Depreciation and impairment (6,560) (455) (8,761) (1,972)
Amortisation and impairment (1,085) (189) (1,833) (1,200)
---------------------------------------------- -------------- -------------- ------------ ------------
Operating loss / Loss before
taxation (8,178) (1,555) (9,665) (5,233)
Tax on loss (100) 399 (124) 364
---------------------------------------------- -------------- -------------- ------------ ------------
Loss from discontinued operations (8,278) (1,156) (9,789) (4,869)
---------------------------------------------- -------------- -------------- ------------ ------------
Results from discontinued operations by segment
Animal Knowledge Animal Knowledge Total
Health Services Total Discontinued Health Services Discontinued
YTD 2019 YTD 2019 YTD 2019 YTD 2018 YTD 2018 YTD 2018
All figures in
GBP000's (audited) (audited) (audited) (audited) (audited) (audited)
----------------- --- ------------ ------------ ------------------- ------------ ------------ --------------
Revenue 6,255 15,141 21,396 5,467 14,357 19,824
Adjusted EBITDA 288 1,386 1,674 (1,744) (317) (2,061)
Operating loss (447) (9,218) (9,665) (2,475) (2,758) (5,233)
---------------------- ------------ ------------ ------------------- ------------ ------------ --------------
Animal Knowledge Total Animal Knowledge Total
Health Services Discontinued Health Services Discontinued
Q4 2019 Q4 2019 Q4 2019 Q4 2018 Q4 2018 Q4 2018
All figures in
GBP000's (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
---------------- --- -------------- -------------- --------------- -------------- -------------- --------------
Revenue 1,736 3,115 4,851 1,576 3,177 4,753
Adjusted EBITDA (287) 190 (97) (497) (414) (911)
Operating loss (452) (7,724) (8,176) (624) (931) (1,555)
--------------------- -------------- -------------- --------------- -------------- -------------- --------------
Enquiries
For further information, please contact:
Benchmark Holdings plc Tel: 020 3696 0630
Peter George, Executive Chairman
Mark Plampin/Septima Maguire, CFO
Ivonne Cantu, Investor Relations
Numis (Broker and NOMAD) Tel: 020 7260 1000
James Black, Freddie Barnfield, Duncan Monteith
MHP Communications Tel: 020 3128 8742
Katie Hunt, Reg Hoare, Alistair de Kare-Silver
benchmark@mphc.com
About Benchmark
Benchmark's mission is to enable food producers to improve their
sustainability and profitability.
We bring together biology and technology, to develop innovative
products which improve yield, quality and animal health and welfare
for our customers. We do this by improving the genetic make-up,
health and nutrition of their stock - from broodstock and hatchery
through to nursery and grow out.
Benchmark has a broad portfolio of products and solutions,
including salmon eggs, live feed (Artemia), diets and probiotics
and sea lice treatments. Find out more at www.benchmarkplc.com
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
TSTTMBATMBJTMIL
(END) Dow Jones Newswires
December 20, 2019 02:00 ET (07:00 GMT)
Benchmark (LSE:BMK)
Historical Stock Chart
From Mar 2024 to Apr 2024
Benchmark (LSE:BMK)
Historical Stock Chart
From Apr 2023 to Apr 2024