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Benchmark Hlgs PLC (BMK)

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Tuesday 19 June, 2018

Benchmark Hlgs PLC

Interim Results

RNS Number : 7814R
Benchmark Holdings PLC
19 June 2018
 

BENCHMARK HOLDINGS PLC

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

Interim results for the six months ended 31 March 2018

Profit growth driven by increased sales from higher margin products

Benchmark (LSE: BMK), the aquaculture health, genetics and advanced nutrition business is pleased to announce its interim results for the six months ended 31 March 2018 (the "period").

Financial summary

£m

H1 2018

H1 2017

%

FY 2017

Revenue

75.7

69.2

+9%

140.2

EBITDA 1

6.3

5.2

+21%

15.7

Adjusted EBITDA2

6.3

3.3

+91%

10.0

Adjusted PBT3

4.4

(0.7)

-

6.3

Loss before tax

(5.6)

(8.9)

-

(8.1)

Profit/(loss) for the period

3.6

(8.2)

-

(7.1)

Basic earnings/(loss) per share (p)

0.67

(1.58)

-

(1.43)

Net debt 4

(41.3)

(12.8)

-

(23.9)

(1)       EBITDA is earnings before interest, tax, depreciation and amortisation

(2)       Adjusted EBITDA is earnings before interest, tax, depreciation, amortisation, exceptional items and acquisition related expenditure

(3)       Adjusted PBT is profit/loss before tax, before amortisation, share option charge, exceptional items and acquisition related expenditure

(4)       Net debt is cash and cash equivalents less loans and borrowings

Financial highlights:

·    Revenue increased by 9% to £75.7m (H1 2017: £69.2m), despite movements in foreign exchange rates. Using the same rates experienced in H1 2017, revenue increased by 17%

·    Adjusted EBITDA increased by 91% to £6.3m (H1 2017: £3.3m) driven by revenue growth in higher margin nutrition and genetics products (and despite a £2.1m reduction in Animal Health)

·    £3.6m reported profit for the period (H1 2017: loss of £8.2m) influenced by improved trading and:

o Reduction in finance costs in the period as a result of foreign exchange movements in USD denominated borrowing

o £9.2m tax credit (H1 2017:  £0.7m) due to reduction in the tax rates in Belgium which reduced the deferred tax liability on intangibles from the acquisition of INVE

·    Increase in net debt to £41.3m as expected, primarily due to £15.1m capital expenditure (including £8.6m investment in Salten facility and investment associated with the field trials of the new sea lice treatment). Net debt includes £18m ringfenced non-recourse debt to fund the Salten facility 

Operational highlights:

·    Commercial scale field trials of Benchmark's new products (Ectosanâ and Cleantreatâ) continuing in Norway; increasing interest from leading producers

·    16% revenue growth in Advanced Nutrition driven by high demand for specialist diets and health products in most markets and particularly in India

·    Continued demand for Genetics products (revenue +11%); construction of additional capacity progressing on time for production in Q3 2018

Board

·    Appointment of Peter George as Chairman on 8 May 2018

 

Post period end: JV with Empresas AquaChile

·    On 8 June 2018, Benchmark announced a breeding and genetics joint venture with Empresas AquaChile and placing to raise £19m (before expenses)

·    Acquisition of 49% interest in strategically important Chilean JV for a total cash consideration of $16.25m (£12.2m):

o Accelerates and de-risks Benchmark's strategy in Chile, the world's second largest salmon market

o Partnering with AquaChile, the world's sixth largest salmonid producer, and the largest in Chile

o JV is expected to be immediately and continuously earnings accretive

 

·    Placing with existing and new investors to raise £19m (before expenses) to fund the total cash consideration of $16.25m (£12.2m), a $5.4m (£4m) loan to the JV and transaction expenses, with the balance being used for general working capital purposes

·    The establishment of the JV is conditional on Bank Approval and Admission amongst other things. The Placing is conditional upon, amongst other things, Admission and the Placing Agreement not being terminated in accordance with its terms

·    Benchmark expects to receive Bank Approval in the next few days and Admission is expected to occur four business days after bank approval is obtained

Outlook

·    Positive macro environment in the Group's main markets. Group on track to deliver on expectations for the full year

Peter George, Chairman of Benchmark, commented:

"Having joined the Board in May, I have been impressed with Benchmark's range of products, its scale and global distribution network, and its reputation and relationships in the industry.  Put this together with the drive and energy of the management team and it is clearly well placed to take advantage of the strong growth fundamentals in its market. 

"I look forward to helping to deliver shareholder value as we continue to develop the Group's leading position in aquaculture."

Malcolm Pye, CEO of Benchmark, commented:  

 

"The Group has delivered good organic revenue growth and improving profitability on an adjusted basis, while we continued to invest in our pipeline of new products and infrastructure."

 

"The outlook for the Group is positive as the drivers for our business are stronger than ever before, with continued growth in aquaculture and increasing recognition from consumers, producers and regulators of the need for sustainable solutions to enable future growth. 

 

"We also expect to benefit from the recently announced, strategically important Chilean JV. 

 

"Overall, we remain on track to achieve our expectations for the current year, and are confident of Benchmark's capacity to generate attractive returns in the years to come."

 

The Company's Interim Report for the period ended 31 March 2018 will shortly be available to view on the Company's website (www.benchmarkplc.com).

 

A presentation for analysts will be held today at 09.30 at the offices of MHP Communications, 6 Agar Street, London, WC2N 4HN. The presentation will also be accessible via a live conference call for registered participants. To register for the call please contact MHP Communications on +44 (0)20 3128 8730 or 8742, or by email on [email protected].

 

 

For further information, please contact:


Benchmark Holdings plc

Tel:  020 7920 3150

Malcolm Pye, CEO


Mark Plampin, CFO


Ivonne Cantu, Investor Relations






Numis

Tel:  020 7260 1000

Michael Meade, Freddie Barnfield (NOMAD)


James Black (Corporate Broking)




MHP Communications

Tel:  020 3128 8730 / 8742

Katie Hunt / Reg Hoare / Alistair de Kare-Silver


 

 

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

 

 

 

Interim Management Report

 

Chairman's statement

 

Overview

 

The fundamental drivers for our business are stronger than ever before, with continued growth in aquaculture, and an increasing recognition from consumers, producers and regulators of the need for sustainable solutions to enable future growth. This has driven our mission from the outset and we are well positioned to succeed.

 

The Group performed well during the first six months of the year. We delivered revenue growth ahead of the industry average and are steadily moving towards profitability, while continuing to invest in our pipeline of new products and infrastructure. Our strategy to diversify our product offering and geographic footprint has proven successful, mitigating local risks inherent in our business.

 

Operationally, we continued our programme to realise synergies from our complementary platform. We are particularly focused on the roll-out of our Group key account programme, and the potential in shrimp genetics by bringing together our genetics capabilities with our leading position in the shrimp hatchery segment through Advanced Nutrition.

 

We have also completed an initial review of our activities and are in the process of implementing an action plan. In the area of diagnostic services, for example, we are restructuring our operations in a way that harnesses the expertise we have in-house while reducing our cost base.

 

We are also exploring the potential for partnership opportunities with organisations within the wider animal health market to exploit our technologies outside aquaculture. We will report on further progress in due course.

 

Animal Health: field trials of next generation sea lice treatment: Ectosanâ and Cleantreatâ

 

Early in the period we launched commercial scale trials for our highly innovative next generation sea lice treatment, with successful results. To date we have completed four trials, with all lice counts showing 100% efficacy. We continue to work on optimising the Cleantreatâ system to increase the efficiency of the total solution.

 

We estimate the loss to the salmon industry as a result of sea lice to be significantly more than $500m per annum, at a time when there has been a recognised lack of effective solutions in the market which are environmentally and welfare friendly. Our trials show Benchmark can address this unmet need, having shown 100% efficacy against sea lice, whilst eliminating all medicine residues ahead of water discharge into the ocean. Once fully licenced we estimate peak annual sales of up to £45m for our new treatment with some revenues already having been booked during the trials phase.

 

Benchmark will continue field trials as part of its market authorisation registration process. Commercial trials are ongoing in Norway, where we have increasing interest for our treatment from the major salmon producers, and will continue to the end of the year. In addition, we will extend trials to other markets and we are exploring the opportunity to start trials in an additional market outside of Norway before the end of 2018.

 

Advanced Nutrition: growth in diets and health products

Our Advanced Nutrition division delivered organic growth driven by increased demand for our higher margin specialist diets and health products, in most markets, and particularly from India and Ecuador, reflecting the increasing importance of these markets and the strength of our platform and network to grow in new regions as they develop. India is the second largest and one of the fastest growing shrimp producing countries, having benefited from a shift in the industry resulting from the Early Mortality Syndrome (EMS) break-outs in Asia in recent years.  

 

It is pleasing to see the good performance of our specialist diet and health products, validating our R&D strategy. We have an active programme of upgrades and new products aimed at strengthening our competitive position and achieving profitable growth, and we saw the launch of three new products in the period.

 

Live feed artemia continues to be the main revenue contributor in Advanced Nutrition (58% of sales in the period), and the recent harvest of top quality GSL artemia was a record one, resulting in stability of supply. Development of our next generation larval feed protocols which combine live feed artemia with artemia replacement diets is progressing according to plan. We believe our next generation diets will allow producers to achieve long term growth, by eliminating the natural constraints resulting from a fully exploited global supply of artemia.

 

Genetics: Consolidating position in salmon and expansion into shrimp

 

Our Genetics division delivered organic revenue growth from continued higher sales volumes and average selling prices. At the same time, we took action to support future growth and higher margins which resulted in some increased operating costs.

 

During the period, we saw the value of having a well-diversified business in terms of customers, geographies and supply chain. There are inherent risks in our industry including disease, border closures and environmental effects and we were able to manage these risks where they materialised while delivering attractive growth.

 

Salmon

 

Following the announced JV with AquaChile, we have leading market positions in salmon genetics in all of the key markets. Our strategy to continue to deliver profitable growth is based on innovation and the year-round, biosecure availability of eggs; progress was made in both areas during the period. Construction of our new Salten facility in Norway continued according to plan, and we expect production to commence in Q3 2018 for delivery of first eggs in Q1 2019. The new facility will significantly increase our capacity, meeting our need for increased production, and will provide the flexibility to be able to offer certainty of supply and biosecurity to our customers.

 

Shrimp

 

Shrimp genetics represent a very attractive opportunity for the Group where we believe we will be able to leverage our experience in salmon and our position in shrimp hatcheries. We are pleased to report that the results of first round of trials in Vietnam were very encouraging and led to the decision to extend trials to Thailand and China, with other key markets to follow.

 

Financial review

 

Group revenue for the period increased by 9% to £75.7m (H1 2017: £69.2m) driven by revenue growth in Advanced Nutrition, Genetics and Knowledge Services of 16%, 11% and 15% respectively.

 

Adjusted EBITDA, which is used by management as the primary measure of financial performance allowing better understanding of the underlying performance of the Group, increased to £6.3m (H1 2017: £3.3m). The increase arose principally from increased sales and a movement in mix towards higher margin products in Advanced Nutrition. This was offset by a higher adjusted EBITDA loss in Animal Health, due to a one-off credit note for the repurchase of inventory linked to the renegotiation of distributor relationships and a relatively high fixed cost base geared up to support the final development and scaling up of new products.

 

Overall investment in R&D (expensed and capitalised) increased from £7.1m to £7.8m. Within that, expensed R&D was reduced but there was an increase in the level of capitalised development costs as the new products progress through the development phase. Operating costs increased in line with sales growth, representing 29.3% of sales (H1 2017: 29.4%).

 

The Group's operating loss reduced from £6.7m to £6.0m. Depreciation during the period increased by 35% from £2.3m to £3.1m, a direct result of investment in plant and machinery. Loss before taxation decreased to £5.6m (H1 2017: £8.9m), significantly helped by a shift from a net finance cost of £2.2m in 2017 to net finance income of £0.7m. This is a result of the foreign exchange gain arising from the revaluation of our USD denominated debt.

 

We reported a £3.6m net profit for the period (H1 2017: £8.2m net loss) driven by a £9.2m tax credit (H1 2017: tax charge £0.7m) due to a decrease in the tax rates in Belgium from 34% to 25% which reduces the deferred tax liability on the intangible assets from the INVE acquisition. Basic earnings per share were 0.67p (2017: loss (£1.58)).

 

As expected, net debt increased to £41.3m (FY 2017: £23.9m; H1 2017: £12.8m) primarily due to £15.1m capital expenditure, including for the expansion of production capacity in the Genetics division (Salten), and investment in capitalised R&D. In addition, working capital investment has increased as revenues have grown.

 

Outlook

 

The outlook for the Group is positive. Our markets have strong long-term growth fundamentals as well as a positive outlook in the near term. We also expect to benefit from the recently announced strategically important Chilean JV.

 

We remain on track to achieve our expectations for the current year, and are confident of Benchmark's capacity to generate attractive returns in the years to come.

 

Independent Review Report to Benchmark Holdings plc

 
Conclusion

We have been engaged by the company to review the condensed set of financial statements in the half-yearly report for the six months ended 31 March 2018 which comprises the consolidated income statement, the consolidated statement of comprehensive income, the consolidated balance sheet, the consolidated statement of changes in equity, the consolidated cash flow statement and the related explanatory notes. 

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly report for the six months ended 31 March 2018 is not prepared, in all material respects, in accordance with the recognition and measurement requirements of International Financial Reporting Standards (IFRSs) as adopted by the EU and the AIM Rules

Scope of review 

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK.  A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.  We read the other information contained in the half-yearly report and consider whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. 

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit.  Accordingly, we do not express an audit opinion. 

Directors' responsibilities 

The half-yearly report is the responsibility of, and has been approved by, the directors.  The directors are responsible for preparing the half-yearly report in accordance with the AIM Rules. 

As disclosed in note 2, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the EU.  The directors are responsible for preparing the condensed set of financial statements included in the half-yearly financial report in accordance with the recognition and measurement requirements of IFRSs as adopted by the EU. 

Our responsibility 

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly report based on our review

The purpose of our review work and to whom we owe our responsibilities

This report is made solely to the company in accordance with the terms of our engagement.  Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose.  To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached. 

 

 

Ian Beaumont

for and on behalf of KPMG LLP 

Chartered Accountants  

1 Sovereign Square, Sovereign Street, Leeds, LS1 4DA

19 June 2018

 

Consolidated Income Statement

for the 6 months ended 31 March 2018

 

 


Notes

6 months
ended
31 March 2018
(unaudited)

6 months
ended
31 March 2017
(unaudited)

12 months
ended
30 September 2017
(audited)



£000

£000

£000






Revenue


75,714

69,155

140,172

Cost of sales


(41,637)

(39,113)

(77,781)

Gross profit


34,077

30,042

62,391

Research and development costs


(5,621)

(6,433)

(13,055)

Other operating costs


(22,178)

(20,302)

(39,297)

Adjusted EBITDA²


6,278

3,307

10,039

Exceptional including acquisition related items

8

-

1,872

5,649

EBITDA¹


6,278

5,179

15,688

Depreciation

11

(3,148)

(2,333)

(4,877)

Amortisation and impairment

12

(9,153)

(9,516)

(18,473)

Operating loss


(6,023)

(6,670)

(7,662)

Finance cost


(1,069)

(2,300)

(1,960)

Finance income


1,730

92

1,495

Share of (loss)/profit of equity-accounted investees, net of tax


(231)

25

27

Loss before taxation


(5,593)

(8,853)

(8,100)

Tax on loss

9

9,164

672

980

Profit/(loss) for the period


3,571

(8,181)

(7,120)






Profit/(loss) for the period attributable to:





- Owners of the parent


3,492

(8,255)

(7,440)

- Non-controlling interest


79

74

320



3,571

(8,181)

(7,120)






Basic earnings/(loss) per share (pence)

10

                   0.67

(1.58)

(1.43)






Diluted earnings/(loss) per share (pence)

10

                   0.66

(1.58)

(1.43)

 

 

1 EBITDA - Earnings before interest, tax, depreciation and amortisation

2 Adjusted EBITDA - EBITDA before exceptional and acquisition related items

 

 

 



6 months
ended
31 March 2018
(unaudited)

6 months
ended
31 March 2017
(unaudited)

12 months
ended
30 September 2017
(audited)



£000

£000

£000






Profit/(loss) for the year


3,571

(8,181)

(7,120)

Other comprehensive income





Items that are or may be reclassified subsequently to profit or loss





Foreign exchange translation differences


(10,318)

9,234

(7,128)

Total comprehensive income for the year


(6,747)

1,053

(14,248)






Total comprehensive income for the year attributable to:





- Owners of the parent


(6,864)

1,013

(14,407)

- Non-controlling interest


117

40

159



(6,747)

1,053

(14,248)

 

Consolidated Balance Sheet

as at 31 March 2018

 



As at
31 March 2018

As at
31 March 2017

As at
30 September 2017



(unaudited)

(unaudited)

(audited)


Notes

£000

£000

£000

Assets





Non-current assets





Property, plant and equipment

11

89,961

62,100

80,845

Intangible assets

12

310,723

354,344

329,137

Equity-accounted investees


2,749

362

2,512

Other investments


112

216

237

Biological and agricultural assets


4,924

5,866

5,745

Trade and other receivables


-

200

-

Total non-current assets


408,469

423,088

418,476

Current assets





Inventories


21,618

26,584

20,053

Biological and agricultural assets


13,612

6,149

10,798

Trade and other receivables


32,991

31,025

38,530

Cash and cash equivalents


21,869

26,312

18,779

Total current assets


90,090

90,070

88,160

Total assets


498,559

513,158

506,636

Liabilities





Current liabilities





Trade and other payables


(34,133)

(28,948)

(44,498)

Loans and borrowings


(558)

(57)

(6,234)

Corporation tax liability


(5,716)

(2,214)

(2,844)

Provisions


(429)

(871)

(450)

Total current liabilities


(40,836)

(32,090)

(54,026)

Non-current liabilities





Loans and borrowings

13

(62,627)

(39,015)

(36,453)

Other payables


(1,232)

(6,825)

(1,213)

Deferred tax


(41,134)

(62,429)

(56,359)

Total non-current liabilities


(104,993)

(108,269)

(94,025)

Total liabilities


(145,829)

(140,359)

(148,051)

Net assets


352,730

372,799

358,585

Issued capital and reserves attributable to owners of the parent





Share capital

3

522

522

522

Additional paid-in capital


339,431

339,431

339,431

Capital redemption reserve


5

5

5

Retained earnings


(20,376)

(26,643)

(24,742)

Foreign exchange reserve


28,042

54,633

38,398

Equity attributable to owners of the parent


347,624

367,948

353,614

Non-controlling interest


5,106

4,851

4,971

Total equity and reserves


352,730

372,799

358,585

 

The notes on pages 14 to 23 are an integral part of this interim consolidated financial information

 

Consolidated Statement of Changes in Equity

for the 6 months ended 31 March 2018

 


 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

521

339,431

45,370

(18,904)

366,418

1,281

367,699









Comprehensive income for the period








(Loss)/profit for the period

-

-

-

(8,255)

(8,255)

74

(8,181)

Other comprehensive income

-

-

9,268

-

9,268

(34)

9,234

Total comprehensive income for the period

-

-

9,268

(8,255)

1,013

40

1,053

Transactions with owners of the company








Contributions by and distributions to owners








Share issue

1

-

-

-

1

-

1

Share based payment

-

-

-

516

516

-

516

Total contributions by and distributions to owners

1

-

-

516

517

-

517

Changes in ownership








Investment in subsidiary by NCI

-

-

-

-

-

3,530

3,530

Total changes in ownership interests

-

-

-

-

-

3,530

3,530

Total transactions with owners of the Company

-

-

-

516

517

3,530

4,047

522

339,431

54,638

(26,643)

367,948

4,851

372,799









Comprehensive income for the period








Profit for the period

-

-

-

815

815

246

1,061

Other comprehensive income

-

-

(16,235)

-

(16,235)

(127)

(16,362)

Total comprehensive income for the period

-

-

(16,235)

815

(15,420)

119

(15,301)

Transactions with owners of the company








Contributions by and distributions to owners








Share based payment

-

-

-

1,086

1,086

-

1,086

Total contributions by and distributions to owners

-

-

-

1,086

1,086

-

1,086

Changes in ownership








Investment of subsidiary with NCI

-

-

-

-

-

1

1

Total changes in ownership interests

-

-

-

-

-

1

1

Total transactions with owners of the Company

-

-

-

1,086

1,086

1

1,087

As at 30 September 2017 (audited)

522

339,431

38,403

(24,742)

353,614

4,971

358,585









Comprehensive income for the period








Profit for the period

-

-

-

3,492

3,492

79

3,571

Other comprehensive income

-

-

(10,356)

-

(10,356)

38

(10,318)

Total comprehensive income for the period

-

-

(10,356)

3,492

(6,864)

117

(6,747)

Transactions with owners of the company








Contributions by and distributions to owners








Share based payment

-

-

-

874

874

-

874

Total contributions by and distributions to owners

-

-

-

874

874

-

874

Changes in ownership








Acquisition of NCI without a change in control

-

-

-

-

-

18

18

Total changes in ownership interests

-

-

-

-

-

18

18

Total transactions with owners of the Company

-

-

-

874

874

18

892

As at 31 March 2018 (unaudited)

522

339,431

28,047

(20,376)

347,624

5,106

352,730

 

 

Consolidated Statement of Cash Flows

for the 6 months ended 31 March 2018

 



6 months

ended

31 March

2018

(unaudited)

6 months

ended

31 March

2017

(unaudited)

12 months

ended

30 September 2017

(audited)


Notes

£000

£000

£000






Cash flows from operating activities





Profit/(loss) for the period


3,571

(8,181)

(7,120)

Adjustments for:





Depreciation of property, plant and equipment

11

3,148

2,333

4,877

Amortisation of intangible fixed assets

12

8,706

9,516

18,473

Loss on sale of property, plant and equipment


5

50

19

Impairment loss on goodwill

12

447

-

-

Finance income


(1,730)

(92)

(1,495)

Finance costs


1,069

2,300

1,960

Share of profit of equity-accounted investees, net of tax


231

(25)

(27)

Non-cash and other movements


-

(473)

-

Foreign exchange gains


(1,314)

(23)

(1,434)

Share based payment expense


874

516

1,602

Tax credit

9

(9,164)

(672)

(980)



5,843

5,249

15,875

Decrease/(increase) in trade and other receivables


4,409

2,985

(1,250)

Increase in inventories and biological assets


(3,188)

(2,728)

(1,253)

(Decrease)/increase in trade and other payables


(8,837)

(3,614)

3,665

Decrease in provisions


(29)

(176)

(643)



(1,802)

1,716

16,394

Income taxes paid


(1,119)

(1,192)

(3,015)

Net cash flows (used in)/from operating activities


(2,921)

524

13,379

Investing activities





Proceeds from investment by NCI


-

-

188

Purchase of investments


(377)

(183)

(2,032)

Purchases of property, plant and equipment

11

(12,881)

(10,930)

(32,740)

Purchase of intangibles

12

(2,249)

(840)

(2,423)

Proceeds from sale of fixed assets


131

148

245

Interest received


94

92

270






Net cash flows used in investing activities


(15,282)

(11,714)

(36,492)






Financing activities





Proceeds of share issues


-

1

1

Proceeds from bank or other borrowings


28,273

-

5,921

Share-issue costs recognised through equity


-

191

-

Repayment of bank borrowings


(5,840)

-

-

Acquisition of non-controlling interests


(32)

-

-

Interest and finance charges paid


(896)

(683)

(1,869)

Payments to finance lease creditors


(212)

(146)

(301)

Net cash inflow/(outflow) from financing activities


21,293

(637)

3,752

Net increase/(decrease) in cash and cash equivalents


3,090

(11,828)

(19,361)

Cash and cash equivalents at beginning of year


18,779

38,140

38,140

Cash and cash equivalents at end of year


21,869

26,312

18,779

 

Unaudited Notes to the Interim Statement

for the 6 months ended 31 March 2018

 

 

1.     Financial information

 

This announcement does not constitute statutory financial statements within the meaning of the Companies Act 2006 and the interim financial information included within has not been audited.

 

This information has been approved for issue by the Board of Directors of Benchmark Holdings plc, a company domiciled and incorporated in the United Kingdom.

 

Statutory accounts for the year ended 30 September 2017 were approved by the Directors on 23 January 2018 and delivered to the Registrar of Companies. The audit report received on those accounts was unqualified and did not contain any emphasis of matter paragraph nor any statement under Section 498 of the Companies Act 2006.

 

2.     General information and basis of preparation

 

The financial information set out in these interim financial statements for the six months ended 31 March 2018 and the comparative figures for the six months ended 31 March 2017 are unaudited. They have been prepared in accordance with the recognition and measurement requirements of International Financial Reporting Standards (IFRS) and IFRIC interpretations issued by the International Accounting Standards Board (IASB) adopted by the European Union and the AIM Rules. They do not contain all the information required for statutory financial statements and should be read in conjunction with the consolidated financial statements of the Group for the year ended 30 September 2017, which have been prepared in accordance with IFRS as adopted by the European Union.

 

The interim financial statements comprise the financial statements of the Group and its subsidiaries at 31 March 2018. Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtained control, and continue to be consolidated until the date when such control ceases.

 

The interim financial statements incorporate the results of business combinations using the acquisition method. In the consolidated balance sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date.

 

Non-controlling interests, presented as part of equity, represent the proportion of a subsidiary's profit or loss and net assets that is not held by the Group.  The total comprehensive income or loss of non-wholly owned subsidiaries is attributed to owners of the parent and to the non-controlling interests in proportion to their respective ownership interests.

 

On consolidation, the results of overseas operations are translated into sterling at rates approximating to those ruling when the transactions took place.  All assets and liabilities of overseas operations, including goodwill arising on the acquisition of those operations, are translated at the rate ruling at the reporting date. Exchange differences arising are recognised in other comprehensive income and accumulated in the foreign exchange reserve.

 

Exchange differences recognised in the income statement in the Group entities' separate financial statements on the translation of long-term monetary items forming part of the Group's net investment in the overseas operation concerned are reclassified to other comprehensive income and accumulated in the foreign exchange reserve on consolidation.

 

The following adopted IFRSs have been issued but have not been applied by the Group in these financial statements.

·     IFRS 9 Financial Instruments: Classification and Measurement has been issued. The standard has been developed in several phases and replaces IAS 39 Financial Instruments: Recognition and Measurement in its entirety. The effective date of the fully completed version of IFRS 9 is for periods beginning on or after 1 January 2018 with retrospective application. The Group has not yet quantified the full impact of all phases of the final standard. It is expected that the Group will adopt IRFS 9 on 1 October 2018.

 

·     IFRS 15 Revenue from Contracts with Customers, which has been issued but has an effective date of 1 January 2018. IFRS 15 supersedes IAS 11 Construction Contracts, IAS 18 Revenue, IFRIC 13 Customer Loyalty Programmes, IFRIC 15 Agreements for the Construction of Real Estate, IFRIC 18 Transfers of Assets from Customers and SIC 31 Revenue - Barter Transactions Involving Advertising Services. The Group has not yet quantified the potential impact of this standard. It is expected the Group will adopt IFRS 15 on 1 October 2018.

 

·     IFRS 16 Leases introduces a single, on-balance sheet accounting model for lessees which has an effective date of 1 January 2019. The Group has not yet quantified the potential impact of this standard. It is expected that the Group will adopt IFRS 16 on 1 October 2019.

 

2.      General information and basis of preparation (continued)

 

The adoption of other standards is not expected to have a material effect on the financial statements.

 

A financial review of the business is included in the Chairman's Statement.

 

3.     Share capital

 

On 9 January 2018, the Company issued a total of 3,137 shares of 0.1p each to certain employees of the Group relating to share options granted in March 2015.

 

On 19 March 2018, the Company issued a total of 65,799 shares of 0.1p each to certain employees of the Group relating to share options granted in March 2015.

 

4.     Going concern

 

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Chairman's Statement.

 

The Directors have considered these factors, the likely performance of the business and possible alternative outcomes and the financing activities available to the Group. Having taken all of these factors into consideration, including the impact on covenants relating to the external borrowing facility, the Directors confirm that forecasts and projections indicate that the Group and its Parent Company have adequate resources for the foreseeable future and at least for the period of 12 months from the date of signing the half year report. Accordingly, the financial information has been prepared on the going concern basis.

 

5.     Accounting policies

 

The accounting policies adopted are consistent with those used in preparing the consolidated financial statements for the financial year ended 30 September 2017.

 

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total earnings.

 

6.     Estimates

 

The preparation of interim financial information requires management to make certain judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual amounts may differ from these estimates.

 

In preparing these interim financial statements the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements for the year ended 30 September 2017.

 

7.     Segment information

 

Operating segments are reported in a manner consistent with the reports made to the chief operating decision maker. It is considered that the role of chief operating decision maker is performed by the Board of Directors.

 

The Group operates globally and for management purposes is organised into reportable segments as follows:

 

·      Animal Health Division - provides veterinary services, environmental services diagnostics and animal health products to global aquaculture, and manufactures licenced veterinary vaccines and vaccine components;

·      Benchmark Genetics Division - harnesses industry leading salmon breeding technologies combined with state-of-the-art production facilities to provide a range of year-round high genetic merit ova;

·      Advanced Animal Nutrition Division - manufactures and provides technically advanced nutrition and health products to the global aquaculture industry;

·      Corporate - the corporate segment represents revenues earned from recharging certain central costs to the operating divisions, together with unallocated central costs.

 

In addition to the above, reported as "all other segments" is the Knowledge Services division, this was created on 1 October 2017 by a combination of Sustainability Science Division and Technical Publishing Division, the results of which were not significant on an individual basis. The division provides sustainable food production consultancy, technical consultancy and assurance services and promotes sustainable food production and ethics through online news and technical publications for the international agriculture and food processing sectors and through delivery of training courses to the industries.

 

Measurement of operating segment profit or loss

 

Inter-segment sales are priced along the same lines as sales to external customers, with an appropriate discount being applied to encourage use of Group resources at a rate acceptable to local tax authorities. This policy was applied consistently throughout the current and prior period.

 



6 months ended 31 March 2018 (unaudited)



 Animal Health

 Benchmark Genetics

 Advanced Animal Nutrition

 All other segments

 Corporate

 Inter-segment sales

 Total


Notes

 £000

 £000

 £000

 £000

 £000

 £000

 £000

 Revenue


4,126

20,978

44,096

7,450

2,295

(3,231)

75,714

 Cost of sales


(5,417)

(11,483)

(21,404)

(4,161)

(185)

1,013

(41,637)

 Gross profit / (loss)


(1,291)

9,495

22,692

3,289

2,110

(2,218)

34,077

 Research and development costs


(2,682)

(1,741)

(1,198)

-

-

-

(5,621)

 Operating costs


(3,947)

(4,666)

(10,168)

(2,858)

(2,757)

2,218

(22,178)

 Adjusted EBITDA


(7,920)

3,088

11,326

431

(647)

-

6,278

 Exceptional including acquisition related items

8

-

-

-

-

-

-

-

 EBITDA


(7,920)

3,088

11,326

431

(647)

-

6,278

 Depreciation


(1,016)

(628)

(857)

(585)

(62)

-

(3,148)

 Amortisation


(123)

(1,077)

(7,131)

(822)

-

-

(9,153)

 Operating profit / (loss)


(9,059)

1,383

3,338

(976)

(709)

-

(6,023)

 Finance cost








(1,069)

 Finance income








1,730

 Share of profit of equity-accounted investees, net of tax








(231)

Loss before taxation








(5,593)

 

 

7.   Segment information (continued)

 



6 months ended 31 March 2017 (unaudited) 



 Animal Health

 Benchmark Genetics

 Advanced Animal Nutrition

 All other segments

 Corporate

 Inter-segment sales

 Total


Notes

 £000

 £000

 £000

 £000

 £000

 £000

 £000

 Revenue


7,151

18,821

37,868

6,415

2,151

(3,251)

69,155

 Cost of sales


(5,856)

(10,958)

(18,726)

(4,447)

(29)

903

(39,113)

 Gross profit / (loss)


1,295

7,863

19,142

1,968

2,122

(2,348)

30,042

 Research and development costs


(3,385)

(1,590)

(1,458)

-

-

-

(6,433)

 Other operating costs


(3,708)

(3,443)

(9,377)

(2,515)

(3,607)

2,348

(20,302)

 Adjusted EBITDA


(5,798)

2,830

8,307

(547)

(1,485)

-

3,307

 Exceptional including acquisition related items

8

(183)

2,517

(6)

(47)

(409)

-

1,872

 EBITDA


(5,981)

5,347

8,301

(594)

(1,894)

-

5,179

 Depreciation


(435)

(544)

(789)

(493)

(72)

-

(2,333)

 Amortisation


(327)

(1,061)

(7,649)

(479)

-

-

(9,516)

 Operating profit / (loss)


(6,743)

3,742

(137)

(1,566)

(1,966)

-

(6,670)

 Finance cost








(2,300)

 Finance income








92

 Share of profit of equity-accounted investees, net of tax








25

 Loss before taxation








(8,853)

 

 



12 months ended 30 September 2017 (audited) 



 Animal Health

 Benchmark Genetics

 Advanced Animal Nutrition

 All other segments

 Corporate

 Inter-segment sales

 Total


Notes

 £000

 £000

 £000

 £000

 £000

 £000

 £000

 Revenue


15,149

30,530

83,659

13,770

4,300

(7,236)

140,172

 Cost of sales


(13,882)

(13,842)

(42,789)

(9,405)

(359)

2,496

(77,781)

 Gross profit / (loss)


1,267

16,688

40,870

4,365

3,941

(4,740)

62,391

 Research and development costs


(7,343)

(2,682)

(3,030)

-

-

-

(13,055)

 Operating costs


(5,527)

(8,221)

(20,159)

(5,240)

(4,890)

4,740

(39,297)

 Adjusted EBITDA


(11,603)

5,785

17,681

(875)

(949)

-

10,039

 Exceptional including acquisition related items

8

(631)

7,005

(19)

(51)

(655)

-

5,649

 EBITDA


(12,234)

12,790

17,662

(926)

(1,604)

-

15,688

 Depreciation


(851)

(1,217)

(1,630)

(1,053)

(126)

-

(4,877)

 Amortisation


(523)

(2,113)

(14,950)

(887)

-

-

(18,473)

 Operating profit / (loss)


(13,608)

9,460

1,082

(2,866)

(1,730)

-

(7,662)

 Finance cost








(1,960)

 Finance income








1,495

 Share of profit of equity-accounted investees, net of tax








27

 Loss before taxation








(8,100)

 

8.     Exceptional including acquisition related 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.

 



6 months
ended
31 March 2018
(unaudited)

6 months
ended
31 March 2017
(unaudited)

12 months
ended
30 September 2017
(audited)



£000

£000

£000






 Acquisition related items


-

(2,046)

(6,254)

 Exceptional restructuring costs


-

174

605






Total exceptional items


-

(1,872)

(5,649)

 

 

9.     Taxation

 



6 months
ended
31 March 2018
(unaudited)

6 months
ended
31 March 2017
(unaudited)

12 months
ended
30 September 2017
(audited)



£000

£000

£000

Current tax expense





Analysis of charge in period





Current tax:





Current income tax expense on profits for the period


3,950

2,165

4,404

Adjustment in respect of prior periods


-

54

245

Total current tax


3,950

2,219

4,649






Deferred tax expense





Origination and reversal of temporary differences


(13,114)

(2,972)

(5,812)

Deferred tax movements in respect of prior periods


-

81

183

Total deferred tax


(13,114)

(2,891)

(5,629)






Total tax credit


(9,164)

(672)

(980)

 

The reasons for the difference between the actual tax charge for the period and the standard rate of corporation tax in the United Kingdom applied to the result for the period are as follows:

 



6 months
ended
31 March 2018
(unaudited)

6 months
ended
31 March 2017
(unaudited)

12 months
ended
30 September 2017
(audited)



£000

£000

£000






Accounting loss before income tax


(5,593)

(8,853)

(8,100)











Expected tax credit based on the standard rate of UK corporation tax at the domestic rate of 19% (2017: 19.5%)


(1,726)

(1,580)

Income not taxable


-

(417)

(1,484)

Expenses not deductible for tax purposes


186

-

801

Deferred tax not recognised


2,245

1,401

2,835

Adjustment to tax charge in respect of prior periods


-

135

428

Effects of changes in tax rates


-

-

(142)

Different tax rates in overseas jurisdictions


(10,532)

(65)

(1,838)

Total tax credit


(9,164)

(672)

(980)

 

Deferred tax is calculated at the substantively enacted rates, at which the temporary differences and tax losses are expected to reverse, in the territories in which they arose.  Reductions in the corporation tax rate in Belgium were substantively enacted in the year. The main rate of corporation tax was reduced from 34% to 29.58% effective from 1 January 2018 and to 25% from 1 January 2020, this change is reflected in the "Different tax rates in overseas jurisdictions" item in the current period in the above reconciliation.

 

10.   Earnings/loss per share

 

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

 


6 months
ended
31 March 2018
(unaudited)

6 months
ended
31 March 2017
(unaudited)

12 months
ended
30 September 2017
(audited)





Profit/(loss) attributable to equity holders of the parent (£000)

3,492

(8,255)

(7,440)





Weighted average number of shares in issue (thousands)

522,371

521,823

522,092





Basic earnings/(loss) per share (pence)

0.67

(1.58)

(1.43)





 

Diluted earnings/loss 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 for the period) based on the monetary value of the subscription rights attached to outstanding share options and warrants. The number of shares calculated above is compared with the number of shares that would have been issued assuming the exercise of the 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, and outstanding warrants, as follows:

 


6 months
ended
31 March 2018
(unaudited)

6 months
ended
31 March 2017
(unaudited)

12 months
ended
30 September 2017
(audited)





Profit/(loss) attributable to equity holders of the parent (£000)

3,492

(8,255)

(7,440)





Weighted average number of shares in issue (thousands) - basic

522,371

521,823

522,092





Adjustment for share options and awards (thousands)

2,848

-

-





Weighted average number of shares in issue (thousands) - basic

525,219

521,823

522,092





Diluted earnings/(loss) per share (pence)

0.66

(1.58)

(1.43)





 

 

11.           Property, plant and equipment


Freehold Land and Buildings

Assets in the course of construction

Long Term Leasehold Property Improvements

Plant and Machinery

E commerce Infra-structure

Office Equipment and Fixtures

Total


£000

£000

£000

£000

£000

£000

£000

Cost








Balance at 1 October 2016

12,448

21,807

4,847

15,512

247

1,136

55,997

Additions

775

9,900

646

2,829

-

121

14,271

Reclassification

950

(4,579)

2,387

1,121

-

121

-

Exchange differences

630

(232)

66

452

-

78

994

Disposals

4

-

(198)

(59)

-

(115)

(368)

Balance at 31 March 2017

14,807

26,896

7,748

19,855

247

1,341

70,894









Balance at 1 April 2017

14,807

26,896

7,748

19,855

247

1,341

70,894

Additions

4,372

11,808

247

5,164

-

188

21,779

Reclassification

14,097

(11,539)

(3,575)

1,133

-

(116)

-

Exchange differences

(320)

(13)

(120)

(302)

-

(59)

(814)

Disposals

-

-

(19)

(259)

-

(127)

(405)

Balance at 30 September 2017

32,956

27,152

4,281

25,591

247

1,227

91,454









Balance at 1 October 2017

32,956

27,152

4,281

25,591

247

1,227

91,454

Additions

954

8,776

736

2,046

-

369

12,881

Reclassification

(2,379)

(5,057)

3,435

4,062

-

(61)

-

Exchange differences

385

(609)

(107)

138

-

13

(180)

Disposals

-

(10)

(61)

(492)

-

(113)

(676)

Balance at 31 March 2018

31,916

30,252

8,284

31,345

247

1,435

103,479









Accumulated Depreciation








Balance at 1 October 2016

956

-

916

3,601

242

259

5,974

Depreciation charge for the year

475

-

409

1,304

1

144

2,333

Reclassification

104

-

(61)

(115)

-

72

-

Exchange differences

225

-

39

326

-

67

657

Disposals

-

-

(113)

43

-

(100)

(170)

Balance at 31 March 2017

1,760

-

1,190

5,159

243

442

8,794









Balance at 1 April 2017

1,760

-

1,190

5,159

243

442

8,794

Depreciation charge for the year

554

-

350

1,513

1

126

2,544

Reclassification

141

-

(244)

137

-

(34)

-

Exchange differences

(41)

-

(75)

(218)

-

(56)

(390)

Disposals

-

-

(10)

(203)

-

(126)

(339)

Balance at 30 September 2017

2,414

-

1,211

6,388

244

352

10,609









Balance at 1 October 2017

2,414

-

1,211

6,388

244

352

10,609

Depreciation charge for the period

666

-

413

1,923

1

145

3,148

Reclassification

-

-

(5)

25

-

(20)

-

Exchange differences

180

-

(47)

150

-

18

301

Disposals

-

-

(96)

(436)

-

(8)

(540)

Balance at 31 March 2018

3,260

-

1,476

8,050

245

487

13,518









Net book value








At 31 March 2018 (unaudited)

28,656

30,252

6,808

23,295

2

948

89,961

At 30 September 2017 (audited)

30,542

27,152

3,070

19,203

3

875

80,845

At 31 March 2017 (unaudited)

13,047

26,896

6,558

14,696

4

899

62,100

 

12.              Intangible assets

 


Websites

Goodwill

Patents and Trade- marks

Intell- ectual Property

Customer Lists

Contracts

Licences

Genetics

Devel- opment costs

Total



£000

£000

£000

£000

£000

£000

£000

£000

£000

£000

 Cost or valuation












 Balance at 1 October 2016


561

153,184

1,075

138,390

6,783

9,648

35,578

26,189

1,440

372,848

 Additions - externally acquired


12

-

26

3

156

-

-

-

-

197

 Additions - internally developed


-

-

-

-

-

-

-

-

643

643

 Exchange differences


-

4,603

(54)

5,066

209

(189)

1,008

78

(24)

10,697

 Balance at 31 March 2017


573

157,787

1,047

143,459

7,148

9,459

36,586

26,267

2,059

384,385













 Balance at 1 April 2017


573

157,787

1,047

143,459

7,148

9,459

36,586

26,267

2,059

384,385

 Additions - on acquisition


-

12

-

-

157

-

-

-

-

169

 Additions - externally acquired


24

-

4

23

(156)

18

-

-

-

(87)

 Additions - internally developed


-

-

-

-

-

-

-

-

1,501

1,501

 Exchange differences


-

(7,858)

(240)

(8,844)

(365)

33

(1,922)

(22)

(29)

(19,247)

 Balance at 30 September 2017


597

149,941

811

134,638

6,784

9,510

34,664

26,245

3,531

366,721













 Balance at 1 October 2017


597

149,941

811

134,638

6,784

9,510

34,664

26,245

3,531

366,721

 Additions - on acquisition


-

51

-

-

-

-

-

-

-

51

 Additions - externally acquired


19

-

10

44

-

-

-

-

-

73

 Additions - internally developed


-

-

-

-

-

-

-

-

2,176

2,176

 Exchange differences


-

(5,286)

(3)

(5,685)

(233)

(170)

(1,654)

(57)

(61)

(13,149)

 Balance at 31 March 2018


616

144,706

818

128,997

6,551

9,340

33,010

26,188

5,646

355,872













 Accumulated amortisation and impairment









 Balance at 1 October 2016


518

279

607

10,290

491

4,123

2,858

1,144

-

20,310

 Amortisation charge for the period


5

-

36

6,931

315

719

1,169

341

-

9,516

 Exchange differences


-

-

(54)

319

5

(66)

16

(5)

-

215

 Balance at 31 March 2017


523

279

589

17,540

811

4,776

4,043

1,480

-

30,041













 Balance at 1 April 2017


523

279

589

17,540

811

4,776

4,043

1,480

-

30,041

 Amortisation charge for the period


8

-

43

6,613

237

724

993

339

-

8,957

 Exchange differences


-

(3)

(1)

(1,251)

(20)

6

(137)

(8)

-

(1,414)

 Balance at 30 September 2017


531

276

631

22,902

1,028

5,506

4,899

1,811

-

37,584













 Balance at 1 October 2017


531

276

631

22,902

1,028

5,506

4,899

1,811

-

37,584

 Amortisation charge for the period


9

-

47

6,303

200

696

1,062

389

-

8,706

 Impairment loss


-

447

-

-

-

-

-

-

-

447

 Exchange differences


-

-

(1)

(1,099)

(18)

(79)

(387)

(4)

-

(1,588)

 Balance at 31 March 2018


540

723

677

28,106

1,210

6,123

5,574

2,196

-

45,149













 Net book value












 At 31 March 2018 (unaudited)


76

143,983

141

100,891

5,341

3,217

27,436

23,992

5,646

310,723

 At 30 September 2017 (audited)


66

149,665

180

111,736

5,756

4,004

29,765

24,434

3,531

329,137

 At 31 March 2017 (unaudited)


50

157,508

458

125,919

6,337

4,683

32,543

24,787

2,059

354,344

 

The impairment loss arose following an impairment review which showed that an amount of Goodwill, held within a subsidiary 5M Enterprises Limited for the previously acquired Old Pond business is no longer supported by discounted future cash flow projections.

 

12.   Intangible assets (continued)

 

Current estimates of useful economic lives of intangible assets are as follows:

 

Goodwill

Indefinite

Patents

2 - 5 years

Websites

5 years

Trademarks

2 - 5 years

Contracts

3 - 20 years

Licences

3 - 20 years

Customer lists

Up to 26 years

Intellectual property

Up to 20 years

Genetic material and breeding nuclei

10 - 40 years

Development costs

Up to 10 years

 

13.   Loans and borrowings

 

On 30 December 2015, the Group entered into a committed revolving credit facility of up to USD70,000,000, with a term of five years. Interest on drawn amounts is payable at a variable rate based on LIBOR plus a margin, which is dictated by the performance of the Group. As at 31 March 2018 the Group had drawn down USD63,550,000 against the facility. The facility is secured on certain of the Group's assets.

At 30 September 2017 SalmoBreed Salten AS, a subsidiary company, had a NOK 60 million short term loan outstanding from its minority shareholder, Salten Stamfisk AS. The loan was fully repaid in October 2017 from the proceeds of a new NOK 216 million construction loan facility provided by Nordea Bank Norge ASA to SalmoBreed Salten AS. The construction loan is available for drawdown up to 31 December 2018. The interest rate on this new facility is 2.5% above seven-day NIBOR. Once the construction loan has been fully drawn, the loan converts into a five-year term loan at an interest rate of 2.65% above 3-month NIBOR. At 31 March 2018 NOK 200 million had been drawn down against this facility.

14.   Events after the reporting date

 

On 8 June 2018 the Company announced an agreement to fund a Chilean breeding and genetics joint venture ("JV") with Empresas AquaChile S.A. ("AquaChile"). AquaChile is the world's sixth largest salmonid producer with revenues of USD633m (2017) and a £560m market capitalisation. The establishment of the JV is conditional upon bank approval and Admission amongst other things. The placing is conditional, amongst other things, upon admission and upon the Placing Agreement not being terminated in accordance with its terms.  Benchmark expects to receive Bank Approval in the next few days and Admission is expected to occur four business days after bank approval is obtained.

Under the terms of the JV, Benchmark will acquire a 49% share in the breeding operation for a total consideration of USD16.25m (payable to AquaChile), made up of USD7.5m paid upfront in cash and USD8.75m in cash to be paid in December 2018. In addition, Benchmark will provide a shareholder loan to the JV of USD5.4m to partially refinance existing debt and to fund the JV's working capital and capital expenditure requirements. AquaChile is providing an equivalent loan to the JV.

The JV will enable Benchmark to produce and sell Atlantic salmon eggs to AquaChile and into the Chilean market; develop salmonid genetics in Chile - Atlantic salmon, coho salmon and rainbow trout; and provide genetics advisory services, R&D and technical support to new customers in Chile.

The JV combines AquaChile's existing high quality land-based production facilities and locally adapted genetics with Benchmark's breeding and genetics capabilities and IP, to create a world class operation. The JV, to be branded as a Benchmark business, will produce eggs in its biosecure land based facilities in Chile, with back-up from Benchmark's breeding operations in Iceland. The JV will supply AquaChile's entire egg requirement for their Atlantic salmon production operations. Benchmark's current egg sales in Chile and AquaChile's existing third party sales will also be channelled through the JV.

The investment is being funded by a placing of 34,545,455 new ordinary shares at a price of 55 pence per share to raise £19m before expenses.

The placing proceeds are intended to be used by the Company to fund the total cash consideration for the JV, the loan to the JV and transaction costs, with the balance being used for general working capital purposes. 

 


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