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Benchmark Hlgs PLC (BMK)

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Tuesday 02 February, 2016

Benchmark Hlgs PLC

Final Results

RNS Number : 7429N
Benchmark Holdings PLC
02 February 2016
 

2 February 2016

BENCHMARK HOLDINGS PLC

("Benchmark" or the "Company" or the "Group")

 

PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2015

 

AND UPDATE POST PERIOD END

 

DIVERSIFIED REVENUE STREAMS AND SUCCESSFUL INTEGRATION OF ACQUISITIONS

 

Benchmark is pleased to announce its Preliminary Results for the year ended 30 September 2015 (the 'period')

 

The period under review was a year of transformational growth for Benchmark. We are delivering against the strategy first set out at IPO, and have been making significant investment in our infrastructure and technological capabilities across the business to create the solid foundations we need to realise our vision and stay ahead of the curve in our fast-paced markets.

Revenue growth in 2015 was underpinned by the performance of the Group's Breeding and Genetics division formed through the acquisitions of SalmoBreed and StofnFiskur, which also contributed to more diversified revenue streams.

 

Post-period end, Benchmark completed the reverse acquisition of INVE Aquaculture Holdings ("INVE") for a total consideration of $342 million, a transformational transaction which forms the Company's final division - Advanced Animal Nutrition.  This acquisition immediately position Benchmark as a global leader in the shrimp and marine fin fish nutritional markets. 

 

Financial Highlights

For the year ended 30 September 2015

●       Revenue increased by 25% to £44.2m (2014: £35.4m), driven by Breeding & Genetics

●       Loss before tax of £11.4m (2014: £1.4m) as we accelerated investment in scientific R&D and felt the impact of a generic competitor to Salmosan/Byelice in Chile

●       EBITDA from Trading Activities of £2.4m (2014: £6.6m) as we invest in corporate infrastructure

●       Investment in scientific R&D (including acquired intangibles) increased to £8.8m (2014: £6.4m)

●       Loss per Share from Trading Activities of 1.13p (2014: Earnings per Share of 3.29p)

●       Basic loss per share of 5.96p (2014: Basic loss per share of 1.04p)

●       Net cash balance of £13.6m at period end (2014: £16.5m)

 

Operational highlights:

●       Successful integration and positive performance of newly created Breeding and Genetics division, which contributed revenues of £15.9m in the year and operating profit of £3.1m

●       Technical Publishing division showed significant improvement following targeted acquisitions, with revenue increasing to £7.0m (2014: £2.9m)

●       Continued progress on product pipeline and investment in R&D :

-       R&D spend increased to £8.8m

-       Product pipeline increased from 47 to 61

-       Hypocat on track for commercial rollout in 2018

-       Next generation capacity being developed at sites in both Ardtoe and Braintree

●      Integration of INVE progressing according to plan

 

Post period end

●       Reverse acquisition of INVE for a total consideration of $342 million (approximately £227 million) of which $300 million (approximately £199 million) was paid in cash and $42 million (approximately £28 million) through the issue of 32,396,158 new ordinary shares

●       Financed by a placing to raise £185.7 million gross proceeds through the issue of 215,922,141 new Benchmark shares

●       INVE revenues and EBITDA for year ended 31 December 2014 were $89 million and $25.4 million respectively.  For the seven months ended 31 July 2015 INVE generated revenues of $60.6m and EBITDA of $15.2m. Since this date INVE has continued to trade in line with management's expectations.  The integration of INVE is progressing well

●       Although the Chilean border closure announced on 6 November has lasted longer than originally anticipated, resulting in subdued sales for the Breeding and Genetics division, Sernapesca (the Chilean National Fisheries and Aquaculture Service) has announced its intention to reopen its borders by 25 February, and the Company has increased its marketing efforts in Chile in response.

●       The Company's other divisions have made an encouraging start to the year.

●       Further information on INVE and the INVE acquisition including historical financial information on INVE and a proforma statement of net assets for the enlarged group can be found in the Company's admission document published on 11 December 2015. 

(http://s3-eu-west-1.amazonaws.com/benchmarkplc.com/documents/Admission-Doc-11-12-15.pdf) 

 

Malcolm Pye, CEO of Benchmark, said:

"It has been a busy year for the Company. Following the acquisition of Salmobreed and Stofnfiskur last year we have successfully integrated the new Breeding and Genetics division, and are particularly proud of its contributions to the Group's revenues. Our strategy of diversification has proven successful, and that endeavour will be furthered again following the transformational INVE acquisition. Our continued investment into R&D has seen our product pipeline increase from 47 to 61, and we are continuing to develop cutting edge capabilities at our research and manufacturing facilities in Ardtoe and Braintree.

"Benchmark has always been committed to targeted M&A activity, and has recently completed the transformational acquisition of INVE Aquaculture. This newest addition to the Group creates the fifth and final 'cog' in our gearbox, and allows us the increased reach and the platform needed to rapidly scale the Company."

Annual Report and Accounts

The Company's Annual Report and Accounts for the financial year ended 30 September 2015 will be available to view on the Company's website at www.benchmarkplc.com today, and will be posted to shareholders on or around 3 February 2016.

For further information, please contact:

 


Benchmark Holdings plc

Tel:  020 7920 3150

Malcolm Pye, CEO


Roland Bonney, COO


Mark Plampin, CFO


Rachel Aninakwah, Communications

Tel: 018 6579 0880



Cenkos Securities PLC

Tel:  020 7397 8900

Ivonne Cantu / Stephen Keys / Callum Davidson (NOMAD)


Russell Kerr / Julian Morse (Sales)




Tavistock

Tel:  020 7920 3150

Matt Ridsdale / Niall Walsh


 

Notes to Editors:

 

Founded in 2000, Benchmark represents a new model in sustainable business development. Over the last decade it has built a profitable group of companies on the economics of a sustainable food chain. The Company is growing in response to a rapidly increasing demand for sustainable food chains, and in particular for seafood, from both mature and emerging markets.

 

Benchmark is an ethical company with an explicit policy based on the "3E's" definition of a sustainable business - ethics, environment and economics - which guides its strategy and operations.

 

The Group has five divisions: Animal Health which researches, manufactures and markets medicines and vaccines particularly for aquaculture, Sustainable Science which researches and informs sustainable development in the food industry, Technical Publishing which effects technology transfer through online publishing and education, Breeding & Genetics which comprises a world-leading Salmon and aquaculture breeding business, and Advanced Animal Nutrition which provides cutting edge nutritional products and services to the aquaculture industry. Benchmark operates internationally with offices in England, Scotland, Belgium, Ireland, Norway, Iceland, USA, Brazil, China, Moscow, India, Thailand and Chile.  As at 1 February 2016, Benchmark employs 826 people.

 

For further information on Benchmark please visit www.benchmarkplc.com

Chairman's Statement

 

Undoubtedly the most significant change in the group took place subsequent to the year end with the completion of the acquisition of INVE Aquaculture in December 2015. INVE is a leading specialist manufacturer of primary stage, technically advanced nutrition and health products for the aquaculture industry. This acquisition is transformative for the group, redefining its size and scale - following the acquisition, headcount, revenues and net assets are more than doubled, and the enlarged group will now serve customers and markets in more than 70 countries worldwide.

 

The INVE acquisition, which was funded through a combination of new equity and debt facilities, cost a total of $342m (c.£227m) and is expected to enhance earnings during the first full year post completion. In view of the size of the acquisition relative to the company, it was classified as a reverse takeover under the AIM Rules and therefore required the approval of shareholders and the readmission of the enlarged share capital to trading on AIM. This acquisition creates the fifth and final 'cog' of the divisional 'gearbox' with the formation of the Advanced Animal Nutrition division.

 

2015 has also seen continued investment in the four key areas identified when the Company was admitted to AIM: high-quality scientific R&D; growing a strong business development team; attracting the highest calibre people; and expansion into existing and new business sectors through targeted M&A. The group grew from three to four trading divisions with the formation of the Breeding and Genetics division, and expenditure on R&D increased two and a half fold in the year as the product pipeline further progressed using the new technologies and manufacturing processes acquired in 2014. Headcount increased from 222 to 402 in the year, and to 826 post year end, resulting from a combination of the acquisition activity and recruitment of further key skills into the Benchmark team. 

 

The year wasn't without challenge, and as highlighted in the interim statement in June, we experienced market turbulence in Chile with the introduction of generic products competing with our leading sea lice treatment product (Byelice / Salmosan®) significantly affecting sales in the first half of the year. This challenge was resisted in the second half by strengthening our customer relationships in those markets through a combination of focused client service and refreshed volume supply contracts.

 

We continue to closely monitor the threat of generic competition to our animal health products which has highlighted the strategic need for the group to create a more varied portfolio of income streams.

 

Targeted acquisitions have played a vital role in delivering our growth strategy and have enabled us to work towards greater diversification of our revenue streams.  I am pleased to report the successful completion of seven strategic additions to the group during the year, including the formation of Benchmark Breeding and Genetics division with the double acquisition in December 2014 of Stofnfiskur and SalmoBreed in Iceland and Norway respectively. We completed a secondary equity raise to finance these acquisitions with gross proceeds of £70m.  The group's Technical Publishing division has also undergone significant transformation in the year following the acquisition of Improve International Group in January 2015, and Ascomber in April 2015. I have been pleased with the integration of all of the acquired businesses into the group, which generally are performing well against their targets.

 

The acquisition of TomAlgae in February 2015, which is developing an innovative shrimp feed, was the group's first move into advanced animal nutrition, and following the purchase of INVE, TomAlgae will form part of the new fifth division.

 

The Sustainability Science division has undertaken a restructuring exercise to tighten management organisation and leverage resources across the Group. We are starting to see progress in areas like the integration of trials and R&D programmes with the Animal Health division and with the Breeding and Genetics division with salmon, cleaner fish and tilapia projects using our facilities in Scotland and Brazil.

 

In the Animal Health division work has progressed well on Benchmark Vaccines' ultra-modern vaccine production facility in Braintree which will transform our manufacturing capability, providing both increased capacity and the ability to manufacture a range of conventional and recombinant vaccines as well as new technology based vaccines, including Virus Like Particles (VLP). Our pipeline of 61 products currently in development with a total addressable market of estimated £646m is generally progressing well.

 

The Group remains committed to investing significant resources to secure the long term trading prospects for the business and, as well as selective in-fill acquisition activity, we will continue to invest significantly in the new product pipeline over the next few years whilst ensuring that the revenue producing divisions are prudently managed so as to achieve their targets.

 

Results

The adverse impact of the generic competition to our Salmosan® product line in Chile led to like for like sales (excluding acquisitions in 2015) for the Group being down on 2014 by 17%. The reduction in Salmosan® sales was more than offset by revenues from new acquisitions and total Group revenue for the period increased by 26% to £44.2m (2014: £35.4m).  This demonstrates the progress made in the Group's important strategy to diversify away from the historic reliance on Salmosan®.

 

The Group's earnings are set out in the Consolidated Income Statement. The Group made an operating loss of £11.6m (2014: operating loss £1.2m) reflecting an increase in Operating costs of Trading Activities to £13.7m (2014: £8.3m) with the completion of the programme to invest in people post IPO and the new acquisitions noted above.  There was also a large increase in operating costs of Investing Activities to £9.7m (2014: £6.4m) which includes a 250% increase in R&D expense and a significant increase in acquisition-related expenses arising from the M&A activity undertaken throughout the year.

 

EBITDA from Trading Activities (the full reported numbers excluding the costs relating to Investing Activities) fell to £2.4m (2014: £6.6m), due to the increase in operating expenses as noted above. 

 

At the year end the group was ungeared and had net cash of £13.6m (2014: £16.5m). Since then the group has arranged revolving credit facilities of $70m jointly with RaboBank and HSBC. $55m of this facility was drawn for the acquisition of INVE in December 2015 and the remainder is available for expansion in working capital.

 

Outlook

Our Breeding and Genetics division has seen a subdued start to the year, due to the temporary closure of the Chilean border to imports of salmon eggs from Iceland (as announced on 6 November 2015) remaining in place for longer than anticipated.  The Chilean National Fisheries and Aquaculture Service (Sernapesca) has now announced that its risk assessment has been completed, and that it expects to reopen the Chilean border to imports of salmon eggs from StofnFiskur by 25 February 2016.  In response, StofnFiskur has stepped up its marketing efforts in Chile.

 

The Group's other divisions, including the new Advanced Animal Nutrition division, have made an encouraging start to the year. The integration of INVE Aquaculture is well underway and proceeding as planned.  The global aquaculture market continues to grow strongly, and Benchmark is better positioned than ever to take advantage of this growth.

 

 

THE HON. ALEXANDER HAMBRO

CHAIRMAN

1 FEBRUARY 2016

 



 

Chief Executive's Statement

In summary

2015 has been a year of transformational growth for Benchmark. We are delivering against the strategy first set out at IPO, and have been making significant investment in our infrastructure and technological capabilities across the business to create the solid foundations we need to realise our vision and stay ahead of the curve in our fast-paced markets.

 

Our people remain our key resource and we continue to invest in them, preparing us for the next phase of growth and maximising the immediate opportunities available to us. We have recruited some world-class industry professionals during 2015, significantly increasing our headcount across the group as it has grown, but we remain agile with the creativity, energy and appetite to take market opportunities as they arise.

 

Group highlights

 

Breeding & Genetics

The formation of Benchmark Breeding and Genetics following the acquisitions in December 2014 of two world-leading salmon breeding companies - StofnFiskur and SalmoBreed - gave us an immediate international presence within the global aquaculture breeding sector. This is a position we have strengthened and diversified throughout the year through the addition of two leading aquaculture breeding and genetics companies, Norway-based Akvaforsk and USA-based Spring Genetics. These supplementary acquisitions support a strategic move into the fast-growing tilapia sector, which has seen global production increase 11 per cent annually over the past decade, making it the world's second most farmed fish. They are also indicative of our wider group strategy of ensuring diversified revenue streams, offering expertise in an increased variety of species whilst utilising the technological synergies available from other areas within Benchmark.

 

The new Breeding and Genetics division has integrated well and delivered its planned growth in its first year under Benchmark's ownership, despite strongly adverse currency headwinds in its major market in Norway.

 

Animal Health

The development of the HypoCat cat allergy vaccine is advancing and remains on target for commercial release in 2018. We have also made substantial progress with the new technologies behind the development of HypoCat, including the further development of the manufacturing process for the Virus Like Particle (VLP) technology and the building of our new antigen manufacturing suite, which is on schedule for delivery in the first half of 2016. This is an important step forward in increasing our capacity, allowing us to manufacture a range of conventional and recombinant vaccines as well as new technology based vaccines, including VLPs. Our pipeline of products has also continued to progress, with the number of products currently in development increased from 47 to 61.

 

Technical Publishing

This financial year was our most effective for the Technical Publishing division as its revenues grew both organically and through targeted acquisition, turning into profit for the first time. The acquisition and integration of two leading business in UK aquaculture and veterinary education effectively tripled the size of the division and allowed for greater penetration into different geographies, providing a stronger platform for knowledge transfer across Benchmark and our global markets.

 

Sustainability Science

A significant restructuring which tightened the management of our Sustainability Science division, coupled with a global shift in the way companies recognise and engage with building sustainability into their business, have resulted in improved prospects for the division. We are starting to see the growth in areas where we have made investments over the previous two years, allowing the integration of trials and R&D programmes with the Animal Health division. We are extending this work to integrate in a similar way with our breeding division with salmon, cleaner fish and tilapia on our farms in Scotland and Brazil.

 

Targeted Acquisition Strategy

Our acquisition strategy is focused on building our capabilities, broadening and deepening our scientific expertise, and securing our routes to market. Acquisitions have played an important role in our growth strategy this year, with seven additions to the Group during the period. In addition to SalmoBreed and StofnFiskur these include:

·      Akvaforsk Genetics - world leaders in aquaculture genetics services and research

·      Spring Genetics - leading tilapia primary breeding company

·      Improve International - leading independent veterinary training and CPD provider

·      TomAlgae - innovator and global leader in freeze dried algal primary feed

·      Ascomber - technical conferences and exhibitions

 

Independently, these all have a strong fit with Benchmark and have each been successfully integrated bringing new technologies, expertise, revenue and profit streams. More importantly however, these acquisitions have been a case of the whole being greater than the sum of its parts - they not only take us into new segments of our core markets and open up new opportunities for further business development but add compound value to each other.

 

Our most recent acquisition, completed post year-end, is our largest to date, is transformational and so it has been included here for clarity. In December 2015 we secured the purchase of INVE Aquaculture, a leading international specialist manufacturer of primary stage technically advanced nutrition and health products for shrimp and marine finfish, for a total consideration of $342 million, of which $300m was payable in cash and $42m payable in Benchmark shares. This was financed from the placing of new shares to new and existing institutions raising approximately £185.7m with the rest being satisfied under new debt facilities provided by RaboBank and HSBC. The acquisition of INVE made us a global leader in the aquaculture technology market overnight and there are many opportunities for the development of productive synergies between the Benchmark companies and INVE. It allows us to enter the shrimp market, a rapidly growing subsector of aquaculture and creates the fifth pillar of Benchmark's divisional structure - the newly formed Advanced Animal Nutrition division.

 

Challenges

The entry of a low-grade generic to our leading sealice product, Salmosan/Bylice in Chile, signalled an important challenge early in 2015 initially causing a significant reduction in market share. This has been addressed through the strengthening of our team on the ground and building stronger relationships with customers through enhanced technical service and loyalty schemes. We have also seen challenges to our Breeding and Genetics division through the sharp decline in value of the Norwegian Krone, which fell by circa 20% from the completion of the acquisition to the financial year end. Despite this, our team were successful in meeting our market targets set for the Breeding and Genetics division.

 

Our people

The continuation of the building of the team at Benchmark has been a rewarding challenge throughout the year. Striving to find the right person for the job, as well as someone who is the right fit for our culture is key factor in our long-term growth and success. This strategy is working, and we have in 2015 secured high calibre appointments across the business to ensure we have the management capability we need to deliver our business goals now and in the future. It is also important to note that we share a common ethos with those companies we have acquired, as integrating the acquisitions throughout the year has been smooth not only with regards to financial targets and structures, but also in the corporate culture which governs everything we do. Benchmark has grown from 124 employees in 2012 to 826 following the acquisition of INVE, and yet our unity of purpose remains the same.

 

Looking forward

The market opportunity is growing and is now better than ever; our business is set to grow for the long term. Our markets continue to maintain strong growth and there is an unprecedented need for the technology we provide. We increasingly have the skills and resources, which, when coupled with our appetite to innovate where technology does not yet exist, mean we can move fast to develop solutions. In addition to creating and applying knowledge, we believe in sharing it so that we can help our customers around the world get the best from the available technology and from the innovative products and services we are delivering. In order to do this we have created a unique business that is bringing together the key disciplines that harness the fundamental biology that defines success for our customers.

 

Last year was one of investment and building the foundations for growth a strategy which is now coming to fruition and will continue to be seen in the accelerating growth and performance of the company over the coming years. Benchmark is now strongly positioned with a unique business opportunity in one of the most important and exciting international business arenas - the food chain. The development of sustainable living and our special focus on aquaculture and global leadership in the technology it needs has created a major opportunity for Benchmark in the future, one which we intent to capitalise on.

 

Chief Financial Officer Statement

£000

2015

2014

Total revenue

44,199

35,354

EBITDA from Trading Activities

2,423

6,623

(Loss) / Profit before tax from Trading Activities

(1,289)

5,031

Total net costs on Investing Activities

(10,070)

(6,406)

Loss before tax

(11,359)

(1,375)

(Loss) / Earnings per share from Trading Activities (pence)

-1.13

3.29

Basic loss per share (pence)

-5.96

-1.04

 

Divisional Analysis

Revenue

EBITDA from Trading Activities

Operating costs of Investing Activities

Operating profit/(loss)

£000

2015

2014

2015

2014

2015

2014

2015

2014

Animal Health

21,098

32,981

2,129

10,462

(6,151)

(4,622)

(5,926)

4,924

Sustainability Science

3,134

3,073

(494)

(1,028)

(140)

(140)

(1,139)

(1,439)

Breeding & Genetics

15,871

-

4,620

-

(234)

-

3,052

-

Technical Publishing

6,967

2,873

284

(272)

(18)

(52)

(306)

(515)

Corporate

2,271

833

(4,116)

(2,539)

(3,111)

(1,592)

(7,280)

(4,157)

Inter-segment sales

(5,142)

(4,406)

-

-

-

-

-

-

Total Group

44,199

35,354

2,423

6,623

(9,654)

(6,406)

(11,599)

(1,187)

 

During the 2015 financial year the Group delivered a satisfactory result whilst managing challenging trading conditions for Salmosan® in Chile and also successfully integrating seven acquisitions.

 

The temporary loss of Salmosan® market share in Chile around the mid-year point, coupled with 2014 sales that were above normalised levels due to new market launches, resulted in a reduction in Animal Health revenue versus the prior year.

 

The most notable acquisitions were the four that formed the new multi-species Breeding and Genetics division and the purchase of Improve International that helped the Technical Publishing division to move into profit during the year at EBITDA level. In addition, the purchase of TomAlgae marked the Group's first entry into advanced animal nutrition. All of the acquired businesses have been integrated on time with minimal disruption and are generally performing well against their targets.

 

Sales of aquaculture breeding products and services became the Group's largest revenue generator and the resultant diversification of sales and profit streams is an important step in the development of Benchmark. 

 

Operating costs increased in 2015 with the completion of the post IPO investment in people and associated infrastructure, and a more than doubling in R&D spend which resulted in good progress with the new product pipeline.

 

Group results

Group turnover increased by 25% to £44.2m in the year (2014: £35.4m) despite the adverse impact of generic competition to our Salmosan® product line.  Revenues from the Animal Health division fell in the year by 36% to £21.1m. This was principally due to the reduction in Salmosan® sales in Chile which resulted from a combination of strong launch year (2014 comparative) sales and generic competition in 2015. It was noted in our interim statement in June 2015 that Salmosan® is a mature product which is off-patent, and the Company took immediate action in response to the increased competition by altering the sales strategy to reward customer loyalty. New volume supply contracts were secured with a number of major customers and sales were stabilised in the second half of the year.

 

The growth in turnover was achieved through the successful acquisition and integration into the Group of SalmoBreed AS and StofnFiskur HF which together formed the basis for the new Benchmark Breeding and Genetics division, and of Improve International Limited which was combined into the Technical Publishing division. The Breeding and Genetics division was further expanded in July 2015 with the acquisition of Akvaforsk and Spring Genetics. These acquisitions have performed strongly in the year, and this acquisitive growth has allowed the Group to work successfully towards its aim of diversifying its operations away from its previous reliance on sales of Salmosan®. The newly formed Breeding and Genetics division contributed revenues of £15.9m in the year, while the Improve International Group contributed a further £3.8m. The Sustainability Science division performed in line with the previous year, with revenues of £3.1m (2014: £3.1m).

 

The Group made an operating loss of £11.6m in the year (2014: operating loss £1.2m) due to a combination of reduced sales and margin in the Animal Health division as noted above, and a higher level of expenditure in Investing Activities in the year which, including amortisation of R&D related intangibles, was up 57% to £10.1m (2014: £6.4m). This was offset by the contributions from the new acquisitions, with the Breeding and Genetics division producing an operating profit of £3.1m and the Technical Publishing division returning an operating loss of £0.3m (2014: operating loss £0.5m).

 

As in previous years, the Group has chosen to subdivide its reported figures in the financial statements into 'Trading Activities' and 'Investing Activities' in order to better present the performance of its business. Trading Activities are those operations which generate earnings in the current period, and Investing Activities are those activities which have no associated income stream in the current period, but which are intended to provide the Group with income generating operations in the future, for example, investment in pipeline products like HypoCat in the Animal Health Division. Both activities are vital to the continued and future success of the Group.

 

Trading Activities

Gross profit of £16.1m was up on the previous year (2014: £14.8m). This was driven by the strongly performing acquisitions, with the Breeding and Genetics division producing gross profit of £6.0m and the Technical Publishing division £2.3m (2014: £0.4m). The reduction in sales of Salmosan® against the prior year, contributed to gross profit in the Animal Health division falling to £6.6m (2014: £14.4m). Overall gross profit percentage fell to 36% (from 42% in 2014) due to the change in sales mix towards the acquired businesses.

 

Operating costs from Trading Activities increased to £13.7m (2014: £8.3m) reflecting the increased size of the Group. Headcount increased from 222 at the start of the period to 402 through the seven acquisitions and further strengthening of the Benchmark team. The skills brought into the Group through the new headcount shows our commitment to investing in the development of our high-calibre team and thus ensures that we have the capability to deliver our growth strategy.

 

Operating costs for the new Breeding and Genetics division were £1.3m and for the Improve International Group were £1.6m in their respective periods since acquisition.

 

Although turnover in the Animal Health division fell from the lost Salmosan® sales in the first half of the year, the operating costs increased to £4.4m (2014: £4.0m) due to the expansion of Fish Vet Group's diagnostics services with the launch of new laboratories in Norway and Thailand.

 

The operating costs at Corporate level have increased from £2.2m in 2014 to £4.9m in the current year.  This increase reflects: the full year impact of the significant post IPO headcount increase in 2014 together with a more moderate increase in 2015; increases in Directors' remuneration to market levels; increased travel related to business development and M&A activity; the full year impact of operating costs specifically related to being a public company (2015: £0.40m (2014: £0.25m)); and continued higher spend on strategic marketing and legal & professional advice to provide enhanced protection for the intellectual property in the Group's products and services.

 

As a result of the above factors EBITDA from Trading Activities of £2.4m was down on the previous year (2014: £6.6m).

 

Depreciation and amortisation at £4.4m in the year (2014: £1.4m) was higher than in previous years due to the significant increase in tangible and intangible fixed assets balances following the increased investment in the year, primarily from the acquisition of the Breeding and Genetics division. 

 

Investing Activities

R&D expenditure, one of the Group's key investment objectives, is classed as an Investing Activity as it is undertaken to provide growth in future income streams. Expenditure has continued to increase significantly in the year as the Group executes its strategy of investing in high-quality scientific research and development. The acquisition of the Breeding and Genetics division further demonstrates this, with these businesses pursuing their own research and development programmes (£1.4m in the period since acquisition). The bulk of the remaining increase was in line with expectations as noted in last year's annual report, and related to the development of the team focusing on the delivery of the Animal Health product pipeline following the acquisitions made in that area in 2014, and the continued collaboration with HypoPet to bring to market a breakthrough cat allergy vaccine.

 

Pre-operational expenses in the early part of the year related to the final costs of setting up the laboratory facilities in Norway and Thailand, and later in the year, related to setting up laboratory facilities in Chile and Brazil. Further, the results of the FAI Aquaculture business, which has been the subject of substantial investment in state-of-the-art marine research and testing facilities, have been reclassified as preoperational in 2015 as the trade previously carried on by the business was disrupted and put on hold while the new facilities are built and commissioned. We expect all of these facilities to become operational in 2016.

 

Significant acquisition related costs were incurred in the year in respect of the acquisition of the new Breeding and Genetics division, which involved an equity raise of £70m, and also the costs associated with the other acquisitions of Improve International Group and TomAlgae. The timing of the completion of the acquisition of SalmoBreed compared to the date when Benchmark actually took control caused an exceptional foreign exchange gain of £1.6m to be incurred which reduced the acquisition related costs of £2.9m to £1.3m. These acquisitions were much larger than those in the previous year, incurring respectively higher level of costs.

 

Exceptional non-recurring costs in the year of £0.2m related predominantly to a restructure at FAI Farms and were greatly reduced from 2014 when costs were incurred in relation to the IPO.

 

Finance costs

Net finance income of £0.2m has been earned in the year (2014: cost £0.2m) as the Group has had no bank borrowings throughout the year following their repayment in 2014.

 

Taxation

The Group incurred a tax charge for its UK and overseas operations of £0.4m in the period (2014: tax credit of £0.1m). The charge relates primarily to a corporation tax charge on overseas profits (£0.9m) against which the Group's losses cannot be relieved. This is offset by a deferred tax credit of £0.5m from a combination of the use of brought forward trading losses and some small deferred tax assets recognised on temporary timing differences expected to reverse in the short-term. The Group has adopted a prudent stance on the recognition of deferred tax assets on trading losses, and deferred tax of £2.9m has not been recognised on losses.

 

Earnings per share

Basic loss and diluted loss per share were both -5.96p (2014: loss per share -1.04p). The movement year on year is due to a combination of the result for the year as noted above, and the issue of 82m new shares in the equity raise used to fund the acquisition of StofnFiskur and SalmoBreed in December 2014. Loss per Share from Trading Activities was -1.13p (2014: earnings per share 3.29p) with the movement again due to the result and the dilutive effect of the higher number of shares in issue.

 

Dividends

The Company has paid no dividends during the year (2014: 0.2p per share) and the Board does not recommend payment of a final dividend in respect of the year ended 30 September 2015.

 

Balance sheet

Group net assets increased in the year to £92.1m (2014: £37.3m), with the main increase arising from a secondary equity raise in December 2014 used in part to fund the StofnFiskur and SalmoBreed businesses. The remainder of the funds have been utilised on the significant investment made in the year in additions to fixed assets and on the new acquisitions. Fixed asset additions of £13.0m includes £9.0m on the new vaccine manufacturing facility at Braintree which should be completed in Spring 2016 and £2.0m on the new state of the art trials unit at Ardtoe.  Note 11 outlines the fair value of the assets and liabilities acquired in the acquisitions made during the year. These include separately identifiable intangible assets of £36.3m relating to the accumulated genetic information in the newly acquired Breeding and Genetics division (£22.1m), intellectual property in the Improve International and TomAlgae businesses (£3.0m), and contracts, licences and customer lists (£11.2m). Deferred tax liabilities totalling £9.0m were provided for the tax timing differences on these intangible assets.  Goodwill of £27.8m arose on the acquisitions. A new equity raise took place in December 2014, which brought in gross funds of £70m, with equity raising costs of £2.1m netted off the share premium account.

 

Cash flow

The group ended the year with cash balances of £13.6m (2014: £16.5m). Of the total cash outflow in the year of £2.9m, £9.0m outflow related to cashflow used in operations and £61.4m was expended on investing activities relating to the purchase of the businesses acquired in the year (£47.6m net of cash acquired with the acquisitions) and additions to fixed assets (£14.0m) mainly relating to the new vaccine manufacturing facility at Braintree and the trials unit at Ardtoe.  These outflows were funded by a net cash inflow from funding activities of £67.4m, with £67.9m net of costs received from the equity raise in December 2014 noted above.

 

Treasury

The Group has established procedures to mitigate financial risk to ensure sufficient liquidity is available to meet foreseeable requirements. These ensure that finance is secured at minimum cost where required and that cash assets are invested securely and profitably. The finance function manages the Group's foreign exchange, liquidity and funding, interest rate and credit risks within a framework of policies and guidelines authorised by the Board. The Group uses simple derivative financial instruments for risk management purposes only. Group policy prohibits speculative arrangements. Transactions in financial instruments are always matched to an underlying business requirement, such as expected foreign currency revenues and payments. The Group uses derivatives only to manage its foreign currency and interest rate risks arising from underlying business activities. No such derivatives were outstanding at the year-end. Treasury activities are reported to the Board on a monthly basis within the Group management accounts.

 

Foreign exchange risk

The Group's reporting currency is pounds sterling. Where Group entities operate with a different functional currency, the Group's policy is, where possible, to allow Group entities to settle liabilities denominated in their functional currency with the cash generated from their own operations in that currency. Where Group entities have liabilities denominated in a currency other than their functional currency (and have insufficient reserves of that currency to settle them), cash already denominated in that currency will, where possible, be transferred from elsewhere within the Group. Where significant transactions are conducted in currencies other than the functional currencies of the individual entities, exposure to movements in exchange rate is mitigated by the use of simple financial derivative instruments as appropriate.

 

Liquidity and funding

The Group's finance function is responsible for sourcing and structuring borrowing requirements. The Group had no bank borrowings throughout the year, and as part of the acquisition of INVE subsequent to the year-end (see below), the Group has refinanced, and obtained a revolving credit facility of up to £46m, leaving sufficient funding facilities to meet its normal funding requirements in the medium term.

 

Interest rate management

Controls over interest rate exposures are in place and dealings are restricted to those banks with the necessary combination of geographic presence and suitable credit rating. As at 30 September 2015, the Group had no bank loans.

 

Credit risk

The policy followed in managing credit risk permits only minimal exposures, with any surplus funds invested mainly in short-term deposits with financial institutions that meet credit criteria approved by the Board. Specifically, counterparty creditworthiness is determined by reference to credit ratings as defined by the global rating agencies: Fitch, Standard & Poor's and Moody's.

 

Transformational acquisition post 30 September 2015

On 30 December 2015 the Group completed the acquisition of INVE Aquaculture Holding B.V. ("INVE"), a leading specialist manufacturer of primary stage technically advanced nutrition and health products for aquaculture, for a total consideration of $342m (approximately £227m). Of the headline consideration, $300m (approximately £199m) was paid in cash and $42m (approximately £28m) was satisfied through the issue of consideration shares. Following the acquisition, which is expected to be earnings enhancing in the first full financial year post-completion, INVE management joined the enlarged Group and invested in Benchmark shares.

 

The cash consideration was financed by a placing of 215,922,141 new Benchmark shares to new and existing institutional investors raising approximately £185.7m. The balance was satisfied with debt funding drawn under new debt facilities provided by HSBC Bank plc and Rabobank (Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A.).

 

In view of the size of the acquisition relative to the Company, the transaction was classified as a reverse takeover under the AIM Rules and therefore required the approval of shareholders and the readmission of the enlarged share capital to trading on AIM.  This approval was received at a General Meeting on 29 December 2015 and the admission to AIM and completion of the acquisition took place on 30 December 2015.

 

This acquisition is transformational for the Benchmark Group as it results in a more than doubling of total revenue, headcount and net assets. The enlarged Group will serve customers in more than 70 countries across six continents.

INVE reported revenue of £54.0m in the year ended 31 December 2014 with operating profits of £14.4m and total assets of £39m.


Consolidated Income Statement

for the year ended 30 September 2015









 


 

 

 

Trading Activities1

2015

Investing Activities2

2015

 

Total

2015

Trading Activities1

2014

Investing Activities2

2014

 

Total

2014

 


Note

£000

£000

£000

£000

£000

£000

 









 

Revenue


44,199

-

44,199

35,354

-

35,354

 

Cost of sales


(28,102)

-

(28,102)

(20,582)

-

(20,582)

 









 

Gross profit


16,097

-

16,097

14,772

-

14,772

 

Other income


-

-

-

101

-

101

 

Operating costs


(13,674)

(9,494)

(23,168)

(8,250)

(4,715)

(12,965)

 

Operating costs - Exceptional


-

(160)

(160)

-

(1,691)

(1,691)

 









 

EBITDA


2,423

(9,654)

(7,231)

6,623

(6,406)

217

 

Depreciation

6

(1,113)

(191)

(1,304)

(533)

-

(533)

 

Amortisation

7

(2,825)

(239)

(3,064)

(871)

-

(871)

 









 

Operating (loss) / profit


(1,515)

(10,084)

(11,599)

5,219

(6,406)

(1,187)

 

Finance cost


(34)

-

(34)

(248)

-

(248)

 

Finance income


260

14

274

60

-

60

 









 

(Loss)/profit on ordinary activities before taxation


(1,289)

(10,070)

(11,359)

5,031

(6,406)

(1,375)

 

Tax on (loss)/profit on ordinary activities


(751)

355

(396)

(860)

914

54

 









 

(Loss)/profit for the year


(2,040)

(9,715)

(11,755)

4,171

(5,492)

(1,321)

 









 

(Loss)/profit for the year attributable to:








 

-     Owners of the parent


(2,273)

(9,715)

(11,988)

4,177

(5,492)

(1,315)

 

-     Non-controlling interest


233

-

233

(6)

-

(6)

 









 



(2,040)

(9,715)

(11,755)

4,171

(5,492)

(1,321)

 









 

Basic (loss) / earnings per share (pence)

5

(1.13)


(5.96)

3.29


(1.04)

 









 

Diluted (loss) / earnings per share (pence)

5

(1.13)


(5.96)

3.23


(1.04)

 

 

1 Before items described in footnote 2 below

2 Includes exceptional items (outlined in note 4), research and development expenditure, pre-operational expenses for new ventures and costs of acquiring new businesses.

 



 

Consolidated Statement of Comprehensive Income



for the year ended 30 September 2015













Trading Activities1

2015

£000

Investing Activities2

2015

£000

 

Total

2015

£000

Trading Activities1

2014

£000

Investing Activities2

2014

£000

 

Total

2014

£000









(Loss)/profit for the year


(2,040)

(9,715)

(11,755)

4,171

(5,492)

(1,321)









Other comprehensive (expense)/income: 








Items that may be reclassified to profit or loss








Movement on foreign exchange reserve


(2,812)

-

(2,812)

89

-

89









Total comprehensive (expense)/ income for the year


(4,852)

(9,715)

(14,567)

4,260

(5,492)

(1,232)









Total comprehensive (expense)/income for the year attributable to:








-     Owners of the parent


(5,071)

(9,715)

(14,786)

4,266

(5,492)

(1,226)

-     Non-controlling interest


219

-

219

(6)

-

(6)











(4,852)

(9,715)

(14,567)

4,260

(5,492)

(1,232)









1 Before items described in footnote 2 below.

2 Includes exceptional items (outlined in note 4), research and development expenditure, pre-operational expenses for new ventures and costs of acquiring new businesses.


Consolidated Balance Sheet

as at 30 September 2015



2015


2014


Note

£000


£000

Assets





Non-current assets





Property, plant and equipment

6

25,141


7,242

Intangible assets

7

65,872


7,821

Investments


147


-

Trade and other receivables


293


523

Biological assets

8

3,392


-

Deferred tax assets


-


339






Total non-current assets


94,845


15,925






Current assets





Inventories


5,359


4,470

Biological assets

8

4,948


539

Trade and other receivables


15,353


11,058

Cash and cash equivalents (excluding bank overdrafts)


13,564


16,511






Total current assets


39,224


32,578






Total assets


134,069


48,503






Liabilities





Current liabilities





Trade and other payables


(24,368)


(8,281)

Loans and borrowings


(63)


(115)

Corporation tax liability


(860)


(48)

Provisions


(1,033)


(1,080)






Total current liabilities


(26,324)


(9,524)

 






Non-current liabilities





Loans and borrowings


(93)


(96)

Other payables


(7,330)


(1,631)

Deferred tax


(8,224)


-






Total non-current liabilities


(15,647)


(1,727)






Total liabilities


(41,971)


(11,251)






Net assets


92,098


37,252






Issued capital and reserves attributable to owners of the parent





Share capital

9

219


137

Share premium reserve

9

94,672


26,903

Capital redemption reserve


5


5

Retained earnings


(1,021)


10,123

Foreign exchange reserve


(2,724)


74






Equity attributable to owners of the parent


91,151


37,242

Non-controlling interest


947


10






Total equity and reserves


92,098


37,252


Consolidated Statement of Changes in Equity

 

for the year ended 30 September 2015

 


Share capital

Share premium reserve

Other reserves*

Retained earnings*

Total attributable to equity holders of parent

Non-controlling interest

Total equity


£000

£000

£000

£000

£000

£000

£000









At 1 October 2013

 

90

693

(10)

11,123

11,896

16

11,912

Comprehensive income for the year








Loss for the year

-

-

-

(1,315)

(1,315)

(6)

(1,321)

Other comprehensive income

-

-

89

-

89

-

89

Total comprehensive income for the year

-

-

89

(1,315)

(1,226)

(6)

(1,232)









Contributions by and distributions to owners








Dividends

-

-

-

(165)

(165)

-

(165)

IPO costs recognised through equity

-

(1,538)

-

-

(1,538)

-

(1,538)

Acquisition part paid in shares

-

100

-

-

100

-

100

Share based payment

3

-

-

438

441

-

441

Deferred tax on share options

-

-

-

42

42

-

42

IPO share issue

43

27,457

-

-

27,500

-

27,500

Employee shares issued

1

191

-

-

192

-

192

Total contributions by and distributions to owners

47

26,210

-

315

26,572

-

26,572









At 30 September 2014

137

26,903

79

10,123

37,242

10

37,252









Comprehensive income for the year

 

 







Loss for the year

-

-

-

(11,988)

(11,988)

233

(11,755)

Other comprehensive expense

-

-

(2,798)

-

(2,798)

(14)

(2,812)

Total comprehensive income for the year

-

-

(2,798)

(11,988)

(14,786)

219

(14,567)









Contributions by and distributions to owners








Share issue

82

69,918

-

-

70,000

-

70,000

Share issue costs recognised in equity

-

(2,149)

-

-

(2,149)

-

(2,149)

Share based payment

-

-

-

748

748

-

748

Deferred tax on share options

-

-

-

96

96

-

96

Acquisition of non-controlling interest

-

-

-

-

-

718

718

Total contributions by and distributions to owners

82

67,769

-

844

68,695

718

69,413









At 30 September 2015

219

94,672

(2,719)

(1,021)

91,151

947

92,098









* The share based payment reserve, which was included within other reserves in the prior year, has been included within retained earnings in the current year and the comparatives adjusted accordingly. At 30 September 2014, the share based payment reserve for the Group was £1,106,000.


Consolidated Statement of Cash Flows

 

for the year ended 30 September 2015

 



2015


2014


Note

£000


£000






Cash flows from operating activities





Loss before tax on ordinary activities


(11,359)


(1,375)

Adjustments for:





Depreciation of property, plant and equipment

6

1,304


533

Amortisation of intangible fixed assets

7

3,064


871

Loss on sale of property, plant and equipment


21


41

Finance income


(274)


(60)

Finance expense


34


248

Foreign exchange gain on acquisition


(1,445)


-

Share based payment expense


458


438








(8,197)


696






Increase/(decrease) in trade and other receivables


2,503


(4,272)

(Increase)/decrease in inventories and biological assets


(468)


3

(Decrease)/increase in trade and other payables


(2,645)


2,903

(Decrease)/increase in provisions


(47)


945








(8,854)


275






Income taxes paid


(105)


(812)






Net cash flows used in operating activities


(8,959)


(537)






Investing activities





Acquisition of subsidiaries and businesses, net of cash acquired


(47,568)


(2,942)

Purchase of investments


(52)


-

Purchases of property, plant and equipment


(14,038)


(3,864)

Purchase of intangibles


(182)


(727)

Proceeds from the sale of fixed assets


148


-

Interest received


274


60






Net cash flows used in investing activities


(61,418)


(7,473)






Financing activities





Proceeds of share issue


70,000


27,500

Share-issue costs recognised through equity


(2,149)


(1,538)

Employee share issues


-


195

Repayment of bank borrowings


(332)


(2,864)

Interest paid


(34)


(248)

Payments to finance lease creditors


(55)


(105)

Dividends paid to the holders of the parent


-


(165)






Net cash flows from financing activities


67,430


22,775






Net (decrease)/increase in cash and cash equivalents


(2,947)


14,765

Cash and cash equivalents at beginning of year


16,511


1,746






Cash and cash equivalents at end of year


13,564


16,511

 


 

1.      Basis of preparation

The results for the year ended 30 September 2015, including comparative financial information, have been prepared in accordance with International Financial Reporting Standards ("IFRS"), and their interpretations adopted by the European Union.

 

Benchmark Holdings plc ("the Company") has adopted all IFRS in issue and effective for the year.  While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of IFRS, this announcement does not itself contain sufficient information to comply with IFRS. The Company expects to publish full financial statements that comply with IFRS in February 2016.

 

The financial information set out above does not constitute the Company's statutory accounts for the years ended 30 September 2015 or 2014, but is derived from those accounts.  Statutory accounts for 2014 have been delivered to the Registrar of Companies.  The auditors have reported on those accounts: their reports were unqualified, did not draw attention to any matters by way of emphasis and did not contain statements under s498 (2) or (3) of the Companies Act 2006. The accounts for 2015 will be delivered following the Company's AGM.

 

The financial information presented in respect of the year ended 30 September 2015 has been prepared on a basis consistent with that presented in the annual report for the year ended 30 September 2014.

 

2.      Accounting policies

The accounting policies adopted are consistent with those of the financial year ended 30 September 2014.

 

The Group has acquired businesses during the period whose accounting policies were not included in the accounts for the financial year ended 30 September 2014.  The accounting policies for these new entities are consistent with those already applied for the existing group, with the addition of the following:

 

Biological assets

Biological assets comprise two asset types: livestock, and fish and fish eggs.

Livestock is measured at fair value less costs to sell. The fair value of livestock is based on quoted prices of livestock and adjusted for age, breed, and genetic merit in the principal (or most advantageous) market for the livestock, and therefore is categorised within level 2 of the fair value hierarchy set out in IFRS 13.

Fish and fish eggs are, in accordance with IAS 41 'Agriculture', measured at fair value, unless the fair value cannot be measured reliably. The principal components of fish and fish eggs within the business are:

·      Salmon Broodstock

·      Salmon fingerlings

·      Salmon eggs

·      Lumpfish eggs and fingerlings

 

Trading Activities and Investing Activities are disclosed and described separately in the interim financial information where it is necessary to do so to provide further understanding of the financial performance of the Group.

 

As a result of business combinations outlined in note 11, the Group has acquired new intangibles during the period which have been capitalised within intangible fixed assets.  The accounting policy in respect of licences has been updated in the financial statements for the year ending 30 September 2015 to reflect the differing asset lives of these newly acquired licences.  Following these acquisitions, the significant intangibles recognised by the Group, their useful economic lives and the methods used to determine the cost of intangibles acquired in a business combination are as follows:

 

Intangible asset

Useful economic life

Valuation method

Websites

5 years

Assessment of estimated revenues and profits

Patents

2-5 years

Cost to acquire

Trademarks

2-5 years

Cost to acquire

Contracts

3-5 years

Assessment of estimated revenues and profits

Licences

6-15 years

Cost to acquire, or if not separately identifiable, assessment of estimated revenues and profits

Intellectual property

Up to 20 years

Cost to acquire, or if not separately identifiable, assessment of estimated revenues and profits

Customer lists

Up to 5 years

Assessment of estimated revenues and profits

Genetic material and breeding nuclei

10-40 years

Cost to acquire, or if not separately identifiable, assessment of estimated revenues and profits

 

Deferred and contingent consideration for these acquisitions is recognised at fair value with movements recognised in the consolidated income statement.

 

3.      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 agriculture, and manufactures licenced veterinary vaccines and vaccine components;

·      Sustainability Science Division - provides sustainable food production consultancy, technical consultancy and assurance services.

·      Technical Publishing Division - 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.

·      Breeding and Genetics Division - Harnesses industry leading salmon breeding technologies combined with state-of-the-art production facilities to provide a year-round range of high genetic merit ova.

·      Corporate - The corporate segment represents profits earned by each segment without allocation of certain central costs. The corporate segment assets and liabilities comprise investments in subsidiaries, cash, other receivables and payables, and financial liabilities fair value through profit and loss.

 

Measurement of operating segment profit or loss

The Group separates its operations into Trading Activities and Investing Activities to report segmental performance. These measures are used by management for planning and reporting purposes. These measures are not defined in International Financial Reporting Standards and may not be comparable with similarly described measures used by other companies. Trading and Investing Activities are described further in note 10.

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.

Segment assets exclude tax assets and assets used primarily for corporate purposes. Segment liabilities exclude tax liabilities and loans and borrowings unless directly related to individual segment.

 

Year ended 30 September 2015


 

Animal Health

 

Sustainability Science

Breeding and Genetics

 

Technical Publishing

 

 

Corporate

Inter-segment sales

 

 

Total

 

Notes

£000

£000

£000

£000

£000

£000

£000

 










 

Revenue


21,098

3,134

15,871

6,967

2,271

(5,142)

44,199

 

Cost of sales


(14,524)

(2,229)

(9,912)

(4,677)

(1,463)

4,703

(28,102)

 










 

Gross profit/(loss)


6,574

905

5,959

2,290

808

(439)

16,097

 

Operating costs relating to Trading Activities


(4,445)

(1,399)

(1,339)

(2,006)

(4,924)

439

(13,674)

 










 

EBITDA from Trading Activities


2,129

(494)

4,620

284

(4,116)

-

2,423

 

Investing Activities:









 

R&D expenditure


(5,199)

-

(1,396)

-

-

-

(6,595)

 

Pre-operational expenses


(887)

(649)

-

-

(29)

-

(1,565)

 

Acquisition related expenses


(65)

-

1,163

(18)

(2,414)

-

(1,334)

 

Exceptional items

4

-

509

(1)

-

(668)

-

(160)

 










 

EBITDA


(4,022)

(634)

4,386

266

(7,227)

-

(7,231)

 

Depreciation


(653)

(160)

(406)

(32)

(53)

-

(1,304)

 

Amortisation


(1,251)

(345)

(928)

(540)

-

-

(3,064)

 










 

Operating profit/(loss)


(5,926)

(1,139)

3,052

(306)

(7,280)

-

(11,599)

 

Finance cost








(34)

 

Finance income








274

 

Group loss before tax








(11,359)

 









 

Year ended 30 September 2014


 

Animal Health

 

Sustainability Science

Breeding and Genetics

 

Technical Publishing

 

 

Corporate

Inter-segment sales

 

 

Total


Notes

£000

£000

£000

£000

£000

£000










Revenue


32,981

3,073

-

2,873

833

(4,406)

35,354

Cost of sales


(18,548)

(2,339)

-

(2,438)

(1,210)

3,953

(20,582)










Gross profit


14,433

734

-

435

(377)

(453)

14,772

Other income


-

101

-

-

-

-

101

Operating costs relating to Trading Activities


(3,971)

(1,863)

-

(707)

(2,162)

453

(8,250)










EBITDA from Trading Activities


10,462

(1,028)

-

(272)

(2,539)

-

6,623

Investing Activities:









R&D expenditure


(2,690)

-

-

-

-

-

(2,690)

Pre-operational expenses


(1,585)

-

-

-

-

-

(1,585)

Acquisition related expenses


(222)

(108)

-

(12)

(98)

-

(440)

Exceptional items

4

(125)

(32)

-

(40)

(1,494)

-

(1,691)










EBITDA


5,840

(1,168)

-

(324)

(4,131)

-

217

Depreciation


(309)

(182)

-

(16)

(26)

-

(533)

Amortisation


(607)

(89)

-

(175)

-

-

(871)

Operating profit/(loss)


4,924

(1,439)

-

(515)

(4,157)

-

(1,187)

Finance cost








(248)

Finance income








60

Group profit before tax








(1,375)

 

30 September 2015

Animal Health

Sustainability Science

Breeding and Genetics

Technical Publishing

 

Corporate

 

Total


£000

£000

£000

£000

£000

£000








Additions to non-current assets

10,965

2,016

62,897

7,826

116

83,820








Reportable segment assets

30,916

6,164

65,855

6,700

24,434

134,069








Total Group assets






134,069








Reportable segment liabilities

7,812

1,372

13,429

5,254

14,104

41,971








Total Group liabilities






41,971

 

30 September 2014

Animal Health

Sustainability Science

Breeding and Genetics

Technical Publishing

 

Corporate

 

Total


£000

£000

£000

£000

£000

£000








Additions to non-current assets

5,655

1,974

-

191

(3)

7,817








Reportable segment assets

16,921

3,917

-

2,320

25,006

48,164

Deferred tax asset






339








Total Group assets






48,503








Reportable segment liabilities

8,039

1,732

-

666

814

11,251








Total Group liabilities






11,251

 

4.      Exceptional items

Items that are material because of their size or nature, non-recurring and 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.

 



2015

2014


£000

£000





Exceptional IPO costs


24

1,298

Exceptional restructuring costs


136

-

Exceptional share based payment expense arising from IPO


-

292

Lease termination costs

-

101





Total exceptional costs


160

1,691





 

On 18 December 2013 Benchmark Holdings plc was admitted to trading on AIM, with significant non-recurring costs being incurred as a result. £24,000 of these costs fell due in 2015.

 

Restructuring costs of £136,000 (2014: £nil) were incurred on the re-organisation of the FAI Farms business during the year.

5.      Earnings per share

Basic earnings per share is calculated by dividing the profit attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares in issue during the period.




2015

2014






Loss attributable to equity holders of the parent (£000)


(11,988)

(1,315)





Weighted average number of shares in issue (thousands)


201,280

126,959





Basic loss per share (pence)


(5.96)

(1.04)

 

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. This is done by calculating the number of shares that could have been acquired at fair value (determined as the average market price of the Company's shares since admission to AIM) based on the monetary value of the subscription rights attached to outstanding share options and warrants.

 

Therefore the Company is required to adjust the earnings per share calculation in relation to the share options that are in issue under the Company's share based incentive schemes as follows:




2015

2014






Loss attributable to equity holders of the parent (£000)


(11,988)

(1,315)





Weighted average number of shares in issue (thousands)


201,280

126,959





Diluted basic loss per share (pence)


(5.96)

(1.04)

 

A total of 2,401,186 potential ordinary shares have not been included within the calculation of statutory diluted earnings per share for the year (2014: 2,250,000) as they are anti-dilutive. However, these potential ordinary shares could dilute earnings per share in the future.

 

Earnings per share from Trading Activities

 

Net profit attributable to equity shareholders has been adjusted to exclude exceptional items and other operating costs relating to Investing Activities as disclosed in note 10.




2015

2014






(Loss)/profit from Trading Activities attributable to equity holders of the parent (£000)


(2,273)

4,177





Weighted average number of shares in issue (thousands)


201,280

126,959





(Loss)/earnings per share from Trading Activities (pence)


(1.13)

3.29

 

Diluted earnings per share from Trading Activities were as follows:

 




2015

2014






(Loss)/profit from Trading Activities attributable to equity holders of the parent (£000)


(2,273)

4,177





Weighted average number of shares in issue (thousands)


201,280

129,209





Diluted (loss)/earnings per share from Trading Activities (pence)


(1.13)

3.23

 

6.      Property, plant and equipment

Group

Freehold Land and Buildings

Assets in the Course of Construction

Long Term Leasehold Property Improve-ments

Plant and Machinery

E commerce Infra-structure

Office Equipment and Fixtures

Total


£000

£000

£000

£000

£000

£000

£000

Cost
















Balance at 1 October 2013

700

-

1,321

2,139

375

535

5,070

Additions

28

142

1,264

2,340

8

248

4,030

On acquisition

-

-

30

198

-

-

228

Reclassification

-

-

-

-

(179)

179

-

Exchange differences

-

-

-

(3)

-

(13)

(16)

Disposals

-

-

-

(134)

-

(44)

(178)









Balance at 1 October 2014

728

142

2,615

4,540

204

905

9,134

Additions

264

10,950

14

1,628

-

178

13,034

On acquisition

4,638

-

77

1,530

-

71

6,316

Reclassification

-

-

114

39

-

(153)

-

Exchange differences

-

-

(39)

31

-

(10)

(18)

Disposals

-

-

(60)

(211)

-

(1)

(272)









Balance at 30 September 2015

5,630

11,092

2,721

7,557

204

990

28,194









Accumulated depreciation
















Balance at 1 October 2013

-

-

100

993

150

255

1,498

Depreciation charge for the year

-

-

134

253

37

109

533

Reclassification

-

-

-

-

(42)

42

-

Exchange differences

-

-

-

(2)

-

-

(2)

Disposals

-

-

-

(93)

-

(44)

(137)









Balance at 1 October 2014

-

-

234

1,151

145

362

1,892

Depreciation charge for the year

175

-

253

736

33

107

1,304

Reclassification

-

-

-

-

-

-

-

Exchange differences

-

-

-

(40)

-

-

(40)

Disposals

-

-

(36)

(67)

-

-

(103)









Balance at 30 September 2015

175

-

451

1,780

178

469

3,053









Net book value








At 30 September 2015

5,455

11,092

2,270

5,777

26

521

25,141

At 30 September 2014

728

142

2,381

3,389

59

543

7,242

At 1 October 2013

700

-

1,221

1,146

225

280

3,572

 

7.      Intangible assets


Websites

Goodwill

Patents and Trade-marks

Intellectual Property

Contracts

Licences

Customer lists

Genetic  Material and breeding nuclei

Total


£000

£000

£000

£000

£000

£000

£000

£000

£000

Cost




















Balance at 1 October 2013

515

1,689

530

-

1,565

1,194

-

-

5,493

Additions - externally acquired

2

1,012

60

1,678

270

1,996

-

-

5,018











Balance at 1 October 2014

517

2,701

590

1,678

1,835

3,190

-

-

10,511

Additions - externally acquired

-

27,931

119

3,074

7,223

2,675

1,327

22,121

64,470

Foreign exchange movement

-

(930)

-

(15)

(534)

(41)

-

(1,865)

(3,385)











Balance at 30 September 2015

517

29,702

709

4,737

8,524

5,824

1,327

20,256

71,596











Accumulated amortisation and impairment



















Balance at 1 October 2013

391

273

374

-

565

216

-

-

1,819

Amortisation charge for the year

68

-

14

-

522

267

-

-

871











Balance at 1 October 2014

459

273

388

-

1,087

483

-

-

2,690

Impairment

-

345

-

-

-

-

-

-

345

Amortisation charge for the year

56

-

61

261

1,369

454

133

385

2,719

Foreign exchange movement

-

-

-

-

(25)

-

-

(5)

(30)











Balance at 30 September 2015

515

618

449

261

2,431

937

133

380

5,724











Net book value










At 30 September 2015

2

29,084

260

4,476

6,093

4,887

1,194

19,876

65,872

At 30 September 2014

58

2,428

202

1,678

748

2,707

-

-

7,821

At 1 October 2012

124

1,416

156

-

1,000

978

-

-

3,674

 

8.      Biological assets


 

2015

2014

Group

 

£000

£000

Organic sheep

 

223

237

Organic beef

 

202

298

Organic pigs

 

2

4

Broodstock

 

7,913

-

Total biological assets

 

8,340

539

Less: non current broodstock

 

(3,392)

-

Total current biological assets

 

4,948

539

 

Livestock

The Group operates a commercial and research farming and technology transfer business, and at 30 September 2015 held 2,992 (2014: 2,856) head of sheep, 246 (2014: 253) head of cattle and 27 (2014: 66) pigs. The Group had farming sales of £310,000 in the year ended 30 September 2015 (2014: £309,000).

 

The Group is exposed to financial risks arising from changes in the market value of farm animals. The Group does not anticipate that prices will decline significantly in the foreseeable future and, therefore, has not entered into derivative or other contracts to manage the risk of a decline in livestock price. The Group reviews its outlook for livestock prices regularly in considering the need for active financial risk management.

 

Broodstock, eggs and fingerlings


Salmon Broodstock

Salmon eggs

Salmon  fingerlings

Lumpfish eggs and fingerlings

Tilapia

Total


£000

£000

£000

£000

£000

£000

Biological assets 1 October 2014

-

-

-

-

-

-

Increase arising from acquisitions

6,058

1,716

326

91

62

8,253

Increase due to production / purchase

1,768

319

135

781

11

3,014

Due to physical changes

(3,005)

6,032

912

-

-

3,939

Foreign exchange movements

169

48

9

3

-

229

Reduction due to sales

-

(6,567)

(924)

(585)

-

(8,076)

Fair value adjustments

646

(63)

(108)

79

-

554

Biological assets 30 September 2015

5,636

1,485

350

369

73

7,913








Broodstock, eggs and fingerlings - non current

3,364

-

28

-

-

3,392

Broodstock, eggs and fingerlings - current

2,272

1,485

322

369

73

4,521


5,636

1,485

350

369

73

7,913

 

Assumptions used for determining fair value of broodstock, eggs and fingerlings

IAS41 requires that biological assets are accounted for at the estimated fair value net of selling and harvesting costs.  Fair value is measured in accordance with IFRS13 and is categorised into level 3 in the fair value hierarchy as the inputs include unobservable inputs in the valuation of broodstock, eggs and fingerlings for which there are no published market data available.

 

The calculation of the estimated fair value of salmon broodstock is primarily based upon its main harvest output being salmon eggs, which are priced upon our current seasonally adjusted selling prices for salmon eggs.  These prices are reduced for harvesting costs, freight costs, incubation costs and market capacity to arrive at the net value of broodstock.  The valuation also reflects the internally generated data to arrive at the biomass. This includes the weight of the broodstock, the yield that each kilogram of fish will produce and mortality rates. The fish take four years to reach maturity, and so the fair value of the age and biomass of the fish is reflected in a discount to the gross biomass to reflect the progress to maturity.

 

The calculation of the fair value of the salmon eggs is based upon the current seasonally adjusted selling prices for salmon eggs less transport and incubation costs, and taking account of the market capacity. The valuation also takes account of the mortality rates of the eggs and expected life as sourced from internally generated data.

 

The calculation of the fair value of the salmon and lumpfish fingerlings is valued on current selling prices less transport costs. Internally generated data is used to incorporate mortality rates and the weight of the fish.

 

The lumpfish eggs are valued at cost. Internally generated data is used to calculate mortality rates.

 

The valuation models by their nature are based upon uncertain assumptions on sales prices, market capacity, weight, mortality rates, yields and assessment of the discounts to reflect the stages of maturity. The Group has a degree of expertise in these assumptions but these assumptions are subject to change. Relatively small changes in assumptions would have a significant impact on the valuation.  A 1% increase/decrease in assumed selling price would increase/decrease the fair value of biological assets by £80,000.

 

Total quantities held at 30 September were:


2015

2014

Salmon broodstock             and fingerlings

452 tonnes

-

Lumpfish fingerlings

1.4m units

-

Salmon eggs

16.5m units

-

 

9.      Share capital and share premium

 

 


 

                Share Capital

Share premium

Allotted, called up and fully paid

Number

£000

£000





Ordinary shares of £1 each




Balance at 1 October 2013

90,307

90

693

Shares issued as part consideration for acquisition of Viking Fish Farms Ltd

184

-

100

Exercise of share options

1,500

2

-

Balance immediately prior to Admission 18 December 2013

91,991

92

793





Ordinary shares of 0.1 penny each




Conversion of one old Ordinary Share of £1 each into 1,000 new Ordinary Shares of 0.1p each

91,991,000

92

793

Exercise of share options

1,457,000

1

-

Placing shares: 42,968,750 of 0.1p each at 64p per share

42,968,750

43

27,457

Less IPO costs recognised through equity

-

-

(1,538)

Benchmark Share Incentive Plan

560,345

1

191

Balance at 30 September 2014

136,977,095

137

26,903

Shares issued to fund the acquisition of Salmobreed and Stofnfiskur

82,353,000

82

69,918

Share issue costs recognised through equity

-

-

(2,149)

Exercise of share options

19,430

-

-

Balance at 30 September 2015

219,349,525

94,672

 

On 14 October 2013 the Company issued 184 ordinary shares of £1 each at a price of £543.48 per share as consideration for the acquisition of 100 ordinary shares of £1 each in the capital of Viking Fish Farms Limited.

 

On 21 November 2013, the Company allotted and issued a total of 1,500 ordinary shares of £1 each to 10 employees of the Group relating to share options granted in August 2010.

 

Immediately prior to Admission to trading on AIM on 18 December 2013, each of the Ordinary Shares of £1 was subdivided into 1,000 shares of 0.1p each.

 

On 18 December 2013, the Company placed 42,968,750 new shares of 0.1p each at a price of 64p per share. On the same date the Company allotted and issued a total of 1,457,000 Ordinary Shares of 0.1p each to 27 employees of the Group relating to share options granted in June 2012 and August 2013.

 

On 23 January 2014 the Company issued 560,345 shares of 0.1 pence each in respect of the Benchmark Share Incentive Plan ("SIP"). The SIP shares consist of shares purchased at 64p per share up to a maximum amount of £1,500 each by eligible employees ("Partnership Shares") as well as free matching shares granted subject to certain conditions of the SIP ("Matching Shares").

 

On 19 December 2014, the Company issued 82,353,000 shares of 0.1p each at a price of 85p per share to fund the acquisition of the entire share capital of Salmobreed AS and 89.45 per cent of the issued share capital of Stofnfiskur HF.

 

Employee share option scheme

The Company introduced an employee share option scheme in 2010.  The options existing immediately before admission to trading on AIM on 18 December 2013 were subdivided into equivalent options over the new 0.1p ordinary shares.  At the year end, options exist over 1,282,000 0.1p ordinary shares in the Company and the exercise price is the nominal value of 0.1p per share.

 

Members of the scheme can exercise the options at any point from the third anniversary of joining the scheme until the options lapse on the tenth anniversary of joining. Options cannot be exercised after the option holder ceases to hold employment with any member of the Group.

 

10.    Trading and Investing Activities

 

The Group separates its operations into Trading Activities and Investing Activities in order to report the performance of its business. Trading Activities are those operations which generate earnings in the current period. Investing Activities are those activities which have no associated income stream in the current period, but which are intended to provide the Group with income generating operations in future periods. These measures are used by management for planning and reporting purposes and in discussions with and presentations to investment analysts and are defined below. These measures are not defined in International Financial Reporting Standards and may not be comparable with similarly described measures used by other companies.

 

In arriving at Trading Activities, the following Investing Activities are excluded from reported results:

 

-     exceptional costs of a non-recurring nature

-     costs of acquiring new businesses

-     pre-operational expenses for new ventures

-     expenditure on research and development

 

A reconciliation of reported earnings to earnings from Trading Activities is shown below.

 

Reconciliation of Reported Earnings to Earnings from Trading Activities - year ended 30 September 2015

 



Investing Activities


 


Year ended 30 September 2015

Exceptional items

Acquisition related costs

Pre-operational expenses for new ventures

R&D expenditure

Trading Activities


£000

£000

£000

£000

£000

£000

Revenue

44,199

-

-

-

-

44,199

Cost of sales

(28,102)

-

-

-

-

(28,102)

Gross profit

16,097

-

-

-

-

16,097








Operating costs

(23,168)

-

1,334

1,565

6,595

(13,674)

Operating costs - Exceptional

(160)

160

-

-

-

-

EBITDA

(7,231)

160

1,334

1,565

6,595

2,423

Depreciation

(1,304)

-

-

118

73

(1,113)

Amortisation

(3,064)

-

-

-

239

(2,825)

Operating (loss)/profit

(11,599)

160

1,334

1,683

6,907

(1,515)








Finance cost

(34)

-

-

-

-

(34)

Finance income

274

-

-

(2)

(12)

260

(Loss)/profit on ordinary activities before taxation

(11,359)

160

1,334

1,681

6,895

(1,289)

Tax on profit on ordinary activities

(396)

-

-

(4)

(351)

(751)

(Loss)/profit for the period

(11,755)

160

1,334

1,677

6,544

(2,040)

(Loss)/profit for the period attributable to:







- Owners of the parent

(11,988)

160

1,334

1,677

6,544

(2,273)

- Non-controlling interest

233

-

-

-

-

233


(11,755)

160

1,334

1,677

6,544

(2,040)

(Loss)/earnings per share (pence)

(5.96)

0.08

0.66

0.83

3.26

(1.13)

Weighted average number of shares (millions)

201,280

201,280

201,280

201,280

201,280

201,280

 

 



 

Reconciliation of Reported Earnings to Earnings from Trading Activities - year ended 30 September 2014

 



Investing Activities



Year ended 30 September 2014

Exceptional items

Acquisition  related costs

Pre-operational expenses for new ventures

R&D expenditure

Trading Activities


£000

£000

£000

£000

£000

£000

Revenue

35,354

-

-

-

-

35,354

Cost of sales

(20,582)

-

-

-

-

(20,582)

Gross profit

14,772

-

-

-

-

14,772








Other income

101

-

-

-

-

101

Operating costs

(12,965)

-

440

1,585

2,690

(8,250)

Operating costs - Exceptional

(1,691)

1,691

-

-

-

-

EBITDA

217

1,691

440

1,585

2,690

6,623

Depreciation

(533)

-

-

-

-

(533)

Amortisation

(871)

-

-

-

-

(871)

Operating profit

(1,187)

1,691

440

1,585

2,690

5,219








Finance cost

(248)

-

-

-

-

(248)

Finance income

60

-

-

-

-

60

Profit on ordinary activities before taxation

(1,375)

1,691

440

1,585

2,690

5,031

Tax on profit on ordinary activities

54

(50)

(30)

-

(834)

(860)

(Loss)/profit for the period

(1,321)

1,641

410

1,585

1,856

4,171

(Loss)/profit for the period attributable to:







- Owners of the parent

(1,315)

1,641

410

1,585

1,856

4,177

- Non-controlling interest

(6)

-

-

-

-

(6)


(1,321)

1,641

410

1,585

1,856

4,171

Earnings per share (pence)

(1.04)

1.30

0.32

1.25

1.46

3.29

Weighted average number of shares (millions)

126,959

126,959

126,959

126,959

126,959

126,959

 



 

11.    Business Combinations

Details of the fair value of the consideration paid and assets acquired during the year are shown below:


Improve International Ltd

Salmo-breed AS

Stofnfiskur HF

Tomalgae C.V.B.A

Ascomber Ltd

Akvaforsk Genetic Center*

Total


£000

£000

£000

£000

£000

£000

£000

Consideration








Cash

3,241

17,108

22,071

290

230

10,644

53,584

Exchange gain/(loss)

-

1,692

(238)

-

-

(9)

1,445

Deferred / contingent consideration

3,000

2,751

9,049

352

58

1,182

16,392

Equity

290

-

-

-

-

-

290

Total consideration

6,531

21,551

30,882

642

288

11,817

71,711









Fair value of assets acquired







Customer list

1,000

-

-

-

327

-

1,327

Licences

-

-

-

-

-

2,675

2,675

Contracts

2,000

3,273

-

-

-

1,950

7,223

Intellectual property

1,100

-

-

1,855

-

-

2,955

Genetics

-

13,641

8,205

-

-

275

22,121

Deferred tax on intangibles

(820)

(4,566)

(1,641)

(635)

-

(1,304)

(8,966)

Fixed assets

174

14

5,440

112

-

576

6,316

Intangible assets

54

-

-

-

-

-

54

Investments

-

24

71

-

-

-

95

Biological assets and inventories

25

-

8,242

10

-

73

8,350

Trade and other receivables

2,025

2,038

915

67

32

486

5,563

Cash and cash equivalents

1,495

2,259

2,179

(1)

6

78

6,016

Trade and other payables

(786)

(2,271)

(1,197)

(428)

(33)

(181)

(4,896)

Tax and social security

(170)

(102)

-

(6)

-

(10)

(288)

Deferred income

(2,532)

-

-

-

(44)

(231)

(2,807)

Loans

-

-

-

(332)

-

-

(332)

Deferred tax

(29)

1

(835)

-

-

82

(781)

Minority interest

-

-

(619)

-

-

(99)

(718)

Total identifiable net assets

3,536

14,311

20,760

642

288

4,370

43,907









Goodwill

2,995

7,240

10,122

-

-

7,447

27,804

*This includes the joint acquisition of Akvaforsk Genetic Center AS and Akvaforsk Genetic Center Inc.

 

During the year the following business combinations occurred:

 

In December 2014, the Group acquired 100% of the issued share capital of Salmobreed AS and 89.45% of the issued share capital of Stofnfiskur HF for total consideration of £21,551,000 and £30,882,000 respectively.  SalmoBreed is a leading salmon genetics company founded in 1999 based in Norway and specialises in developing genetic material for salmon breeders which improves areas such as growth, disease resistance and product quality.  Stofnfiskur is a salmon breeding company which was founded in Iceland in 1991 and which is able to supply eggs outside the natural salmon breeding season through its land-based environmentally controlled facility. These companies have long-established salmon breeding programmes and represent an opportunity for the Group to enter the animal breeding and genetics industry, with potential synergies between the two acquired businesses. The intangibles arising upon acquisition represent the genetic breeding and nuclei acquired, and in the Salmobreed acquisition, the value of the customer contracts in place on acquisition.  The goodwill on the acquisitions represents the synergies available from combining the two businesses. Contingent consideration of NOK 30 million (c. £2.6m at 30 September 2015) is due to the vendors of the business if the number of eggs sold by SalmoBreed over the period 1 January 2015 to 31 December 2017 exceeds a specified quantity. The directors believe that the business will sell in excess of this amount, and so full provision has been made for this payment in these financial statements, disclosed as due in greater than one year. Maximum contingent consideration of ISK 1,791m (c. £9.2m at 30 September) is payable to vendors of the business if egg sales exceed certain thresholds in each of the three calendar years ending 31 December 2015, 2016 and 2017. The directors believe that approximately £6.0m will be paid in the next financial year, with the balance of £3.2m payable in the following two financial years. Full provision for these amounts has been made in the financial statements.

 

On 30 January 2015, the Group acquired the business and assets of Improve International Ltd for cash and equity up to a maximum consideration of £6,531,000.  The business designs and delivers technical training to veterinary practitioners.  The intangible assets arising on acquisition represent the value of a contract in place on acquisition, the customer list, and the technical content of the training courses.  The goodwill arising on acquisition represents the synergy available through combining the acquisition with Benchmark's existing publishing and online delivery functions. Contingent consideration up to a maximum of £3,000,000 is payable in 2016 dependent on Improve Internationals Group's adjusted profit exceeding a set level for the year to 31 December 2015.

 

On 17 February 2015, the Group purchased Tomalgae C.V.B.A, a Belgian-registered business specialising in freeze-dried algae feed product, for a maximum consideration of £642,000, such consideration being dependent upon a certain volume of sales being achieved during the next five years. The acquisition sees the Group expand its product pipeline and the resulting intangible represents the 'know how' gained from existing research undertaken by the Tomalgae team to date.

 

On 27 July 2015 the Group acquired the entire issued share capital of Norwegian aquaculture genetics and research business Akvaforsk Genetics Center AS ("AFGC") and 80% of the issued share capital of Akvaforsk Genetics Center Inc. ("Spring Genetics"), a US based tilapia genetics and breeding business, for a combined initial consideration of NOK 140m (c. £11.0m), satisfied from existing cash balances.

 

The remaining 20% of the issued share capital of Spring Genetics is subject to a put/call option which is automatically exercised in 2022, the value of which will be determined by an earn-out formula linked to the cumulative sales performance of the Spring Genetics business in the period 2016 to 2021. The minimum consideration for these shares is NOK 1 and the maximum consideration is NOK 60m (c. £4.7m), payable in 2022. The directors of the Company have made provision for contingent consideration of NOK 10m (c. £0.8m) in these accounts.

 

Details of the fair value of consideration paid and assets acquired have been combined for the two businesses as they were acquired under unified contracts and applicable consideration.

 

The intangibles arising upon acquisition represent the value of customer contracts and licences in place on the acquisition of AFGC, together with the genetic material and breeding nucleus in respect of Spring Genetics. The goodwill on the acquisitions represents the synergies arising from combining the businesses with Benchmark together with the world class team of geneticists acquired with the business and fits with the Group's strategic objective of offering its expertise across a range of species within the aquaculture arena.

 

Entities acquired during the year contributed £20,000,000 to the Group's revenue and increased EBITDA by £5,000,000 for the period. The table below shows the Group's pro-forma revenue and EBITDA if the acquisitions had taken place at the start of the period.

 


 

 

2015

Improve International Ltd

Salmo-breed AS

Stofnfiskur HF

Tomalgae C.V.B.A

Ascomber Ltd

Akvaforsk Genetic Center

Total


£000

£000

£000

£000

£000

£000

£000

£000

Revenue

44,199

1,698

2,092

2,109

-

-

1,404

51,002

EBITDA

(7,231)

458

341

(356)

(183)

-

(98)

(7,069)

 

12.    Events after the reporting date

On 30 December 2015, Benchmark Holdings plc completed the acquisition of 100% of INVE Aquaculture Holding B.V. ("INVE"), a leading specialist manufacturer of primary stage technically advanced nutrition and health products for aquaculture, for a total consideration of $342 million (approximately £227 million).  Of the headline consideration, $300 million (approximately £199 million) was paid in cash and $42 million (approximately £28 million) was satisfied through the issue of Consideration Shares. 

 

The cash consideration was financed by a placing of new shares to new and existing institutional investors which raised £185.7 million through the placing of 215,922,141 new Benchmark shares at 86p per share.  The balance was satisfied with debt funding drawn under new debt facilities.

 

The fair value of the assets and liabilities acquired in the acquisition has not yet been finalised.

In view of the size of the acquisition relative to the company, the transaction was classified as a reverse takeover under the AIM Rules and therefore required the approval of shareholders and the readmission of the enlarged share capital to trading on AIM. 

 

This approval was received at a General Meeting on 29 December 2015 and the admission to AIM and completion of the acquisition took place on 30 December 2015.

 

The Directors identified a strong strategic rationale for the acquisition.  INVE's leadership in speciality aquaculture nutrition market is complementary to Benchmark's position in genetics and health.  The acquired business complements Benchmark's existing expertise and operations within aquaculture and the enlarged group will become a leading global provider of technology for sustainable food production, with a strong focus on the aquaculture sector, benefiting from immediate scale in advanced aquaculture nutrition and health products, an enhanced sales, marketing and distribution network and the opportunity for cross selling and new product development.  The acquisition created the Advanced Animal Nutrition Division, a fifth and final division of the Benchmark Group.

 

The enlarged group will serve customers in more than 70 countries across six continents, and the acquisition is expected to be immediately earnings enhancing in the first full financial year post-completion.  As disclosed in the admission document, INVE revenues and EBITDA, as converted into IFRS format for the purposes of the admission document, for year ended 31 December 2014 were £54 million and £15 million respectively.

 

On 6 November, the Company announced that Iceland's national Marine Research Institute (the "Institute") detected a strain of viral haemorrhagic septicaemia virus ("VHS") in its lumpfish stock which led to the Chilean National Fisheries and Aquaculture Service (Sernapesca) temporarily suspending imports of all aquatic biological products from Iceland.  Stofnfiskur hf, which is based in Iceland and forms part of Benchmark's Breeding and Genetics division, exports salmon eggs from its production facilities to customers worldwide, including in Chile.  The Breeding & Genetics division has seen a subdued start to 2016 due to the closure of the Chilean border remaining in place for longer than anticipated.  Sernapesca has now announced that its risk assessment has been completed, and that it expects to reopen the Chilean border to imports of salmon eggs from Stofnfiskur by 25 February 2016.  In response, Stofnfiskur has stepped up its marketing efforts in Chile.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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