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Benchmark Hlgs PLC (BMK)


Friday 21 November, 2014

Benchmark Hlgs PLC

Placing, Proposed Acquisitions and Trading Update

RNS Number : 7472X
Benchmark Holdings PLC
21 November 2014




21 November 2014


Benchmark Holdings plc

("Benchmark" or the "Company")


Placing, Proposed Acquisitions, Trading Update and Notice of General Meeting


Transformative acquisitions move Benchmark into aquaculture genetics and breeding arena


Benchmark Holdings PLC, the international animal health, technical publishing and sustainability science business, is pleased to announce the proposed acquisitions of the entire issued share capital of SalmoBreed AS ("SalmoBreed") and 81.84 per cent. of the issued share capital of Stofnfiskur HF ("Stofnfiskur") (the "Acquisitions") and the placing of 82,353,000 new Ordinary Shares in the Company at 85 pence per share ("the Placing"), raising gross proceeds of approximately £70 million to fund the Acquisitions and to increase the vaccine manufacturing capacity of its BioCampus facility in Edinburgh. The Company also takes this opportunity to provide a trading update.


·    SalmoBreed is a leading salmon genetics company founded in 1999 based in Norway. SalmoBreed specialises in identifying and developing genetic material which improves areas such as growth, disease resistance and product quality.


·    Stofnfiskur is a salmon breeding company founded in Iceland in 1991 which differentiates itself through its ability to supply eggs outside the natural salmon breeding season allowing the salmon farming operations to optimise their efficiency.


·    The combination of SalmoBreed and Stofnfiskur will create what the Directors believe will be a world leading salmon and aquaculture breeding business and the world's second largest salmon egg producer.  Benchmark Genetics Limited will be formed, creating a fourth business division for the Company -.


·    The consideration for SalmoBreed comprises an initial payment of NOK 205,000,000  (approximately £19.5m) and up to an additional amount of NOK 30,000,000 (approximately £2.9m) under an earn out over three years upon the satisfaction of certain performance conditions.


·    The consideration for 81.84 per cent. of Stofnfiskur comprises an upfront payment of ISK 4,103,327,555 (approximately £20.7m) with up to an additional amount of up to ISK 1,637,372,842 (approximately £8.3m) under an earn-out over three years. The Company may seek to purchase additional shares in Stofnfiskur to increase its shareholding.


·    The Company has identified significant synergies between the Acquisitions, which are a complementary fit within the existing Benchmark business as breeding technology is one of the primary drivers of efficient production, disease management and sustainability. The technology used in genetics and breeding also function within the same fundamental biology currently being exploited in the Company's Animal Health and Sustainability Science divisions.


·    The Acquisitions reflect Benchmark's continued commitment to the aquaculture industry, which now supplies more animal protein to the global market than beef. The Acquisitions also represent a long-term platform to expand into other aquaculture markets such as tilapia, catfish, grouper, sea bass, sea bream and shrimp.


·    The Company intends to use up to £10m of the Placing proceeds to expand and accelerate the development of its vaccine manufacturing facility in Edinburgh in response to continued growth in its vaccine division, increased requirements to satisfy its pipeline and demand of contract manufacture business and the additional specialist capacity required to manufacture the HypoCat vaccine.


·    The Placing is conditional on, amongst other things, the agreements providing for the Acquisitions becoming unconditional save in respect of conditions relating to the Placing and, in the case of SalmoBreed, payment of the consideration, shareholder approval and admission of the Placing Shares to trading on AIM.  


Trading Update and Notice of Results

The Company is pleased to announce that trading to the year ended 30 September 2014 was in line with expectations. Salmosan, Benchmark's sea lice treatment, has traded ahead of forecasts on a global basis and the Company has seen growth across its vaccines division as a whole. Contract manufacturing opportunities within the division are progressing and management's outlook remains unchanged.

The Company's Preliminary Results for the year ended 30 September 2014 will be announced on 27 January 2015.

Further information on SalmoBreed

SalmoBreed is recognised as having world leading genetics, and was one of the first animal breeding companies to introduce the use of genetic marker and typing tools in its selection programmes and to launch salmon eggs with QTL (qualitative trait loci) for resistance to two of the key diseases in salmon. In the year ended 31 December 2013 SalmoBreed generated reported EBITDA of £0.2m and had reported net assets of £1.8m as at 31 December 2013.

SalmoBreed was founded, and is still owned, by a consortium of Norwegian salmon farmers who have operated it primarily as an internal supplier of genetics for the production of salmon eggs for their own farms and for distribution to third parties. Historically, SalmoBreeds's revenues have been derived from the royalties paid for its genetic material by salmon egg producers being, up to completion of the SalmoBreed Acquisition, solely SalmoBreed's existing shareholders. Benchmark, however, will operate SalmoBreed under a different business model such that going forward SalmoBreed's revenues are expected to derive from the sale of salmon eggs produced from its genetic material by third party contract producers. The Actual Restated figures below present SalmoBreed's results as if it had operated under Benchmark's proposed business model historically.

In addition, as part of the SalmoBreed Acquisition, SalmoBreed will enter into commercial arrangements with a number of SalmoBreed's existing shareholders relating to the terms (including as to pricing) on which those companies will, following the SalmoBreed Acquisition, produce eggs for SalmoBreed, including the pricing of those eggs.

The unaudited pro forma and forecast figures set out below illustrate the combined effect of the change in the business model and the agreed commercial terms, and have been adjusted for one-off non recurring costs identified. The pro forma information has been prepared for illustrative purposes only, based on management's assumptions and, because of its nature, addresses a hypothetical situation and does not represent SalmoBreed's actual financial results.




SalmoBreed Income Statement (£'000)


Pro forma


Year ended 31 December










Gross profit




Gross profit (%)




Other operating costs












Eggs sold (m)






Further information on Stofnfiskur


Stofnfiskur is a salmon breeding company founded in Iceland in 1991. Stofnfiskur is able to supply eggs outside of the natural salmon-breeding season, which allows the major salmon farming operators to improve the efficiency and the utilisation of their high capital processing operations by running them at stable and managed volumes throughout the year. The 'out of season' salmon eggs required to fuel this year-round production can only be produced in land-based controlled environment facilities. Iceland has a unique geology, which permits high volumes of biosecure water from deep bore holes to be drawn at high volumes and at a range of temperatures and salinities. Stofnfiskur has the capability and capacity to make use of these natural conditions to produce eggs on a significant scale. In the year ended 31 December 2013, Stofnfiskur generated reported revenues of £6.1m with EBITDA of £0.4m and had net assets of £5.0m as at 31 December 2013.


The unaudited Actual Restated financial information set out below has been adjusted to remove the non cash impact of changes in inventory value and changes in the value of the biological asset(s) on the profit and loss statement. The Directors believe that this pro forma more appropriately reflects the normalised performance of the business.


This information has been prepared for illustrative purposes only and because of its nature addresses a hypothetical situation and therefore does not represent Stofnfiskur's actual financial results.



Stofnfiskur Income Statement (£'000)



Years ended 31 December








Gross profit



Gross profit (%)



Other operating costs






Minority interest



Benchmark share of EBITDA






Eggs sold (m)



Eggs produced (m)




Figures calculated using exchange rates in the range of £1:ISK194 to £1:ISK198


Immediately following completion of the Stofnfiskur Acquisition, certain shareholders in Stofnfiskur (other than Benchmark Genetics Limited) will hold 18.16 per cent. of the issued share capital of Stofnfiskur ("Minority Stofnfiskur Shareholders").


The Directors consider that, notwithstanding the Minority Stofnfiskur Shareholders, the Group will be able to implement its business plan for the combined business.


The Combined Business


The Directors believe that the combination of SalmoBreed and Stofnfiskur within the wider Benchmark group will create a world-leading salmon and aquaculture breeding business and the world's second largest salmon egg producer. The global market for salmon egg production is estimated by the Company to amount to £160m. The combination of SalmoBreed and Stofnfiskur brings together the strengths of SalmoBreed in genetics, with Stofnfiskur's biosecure production facilities capable of supplying fertile eggs all year round, as well as a complementary geographic footprint. The Directors believe that these strengths will allow the Company to accelerate growth in the combined business and expand its international market share, increasing its utilisation of production capacity (currently at c. 35 per cent.) and enhancing its margins and profitability. In addition, the technology held within the two companies will provide an excellent platform to build into new and emerging markets for aquaculture breeding across different species.




Related Parties

Invesco Asset Management Limited ("Invesco") and Lansdowne Partners (UK) LLP ("Lansdowne") currently own 10.22% and 13.51% respectively of the Company's existing ordinary share capital and are therefore each treated as a related party of the Company under Rule 13 of the AIM Rules for Companies ("the AIM Rules") as a substantial shareholder. Invesco's and Lansdowne's respective participations in the Placing are therefore treated as related party transactions for the purposes of the AIM Rules.


The Directors of the Company consider, having consulted with Cenkos Securities plc as the Company's nominated adviser, that the terms of the Placing are fair and reasonable insofar as the Company's shareholders are concerned.



The Directors and founders have irrevocably undertaken to vote or to direct the registered holder of the shares in which they and their connected persons are interested to vote in favour of the resolutions to be proposed at the General Meeting in respect of the 46,022,806 Existing Ordinary Shares in aggregate (representing approximately 33.59 per cent. of the issued ordinary share capital of the Company) in which they and their connected persons are interested.



Benchmark Chief Executive Officer, Malcolm Pye, commented:

"We are delighted to be making today's announcement. The Acquisitions represent a unique opportunity for Benchmark to enter the animal breeding and genetics industry at an exciting time in the development of the global aquaculture industry. Bringing the capabilities and expertise of SalmoBreed and Stofnfiskur into Benchmark significantly expands our activities in aquaculture; strengthens our position as a leading international supplier to the industry and creates a substantial platform for future growth.


"Animal breeding and genetics play a primary role in the development of production efficiency and sustainability in the global livestock and aquaculture industries. It is particularly important in the high volume production systems that supply the world's poultry, pork, dairy and fish (aquaculture) markets. It is a great fit with the existing business as breeding and genetics function within the same fundamental biology as is being exploited in Benchmark's Animal Health and Sustainability Science divisions, thus creating numerous opportunities for synergistic development and combined approaches to solving key industry problems, including disease, metabolic disorders and nutritional efficiency.


"The allocation of £10m of the placing towards accelerating the development of the Company's BioCampus in Edinburgh is also indicative of the increased demand for capacity within Benchmark's vaccine division as it continues to grow. The development of the BioCampus was always a core component of our strategy, with the addition of the HypoCat production and increased demand from our existing customers moving that process forward faster than initially anticipated."


A circular will be sent to shareholders shortly giving notice of a General Meeting of Benchmark PLC to consider, and if thought fit, approve the allotment of the Placing Shares. The General Meeting will be held at Tavistock Communications, 131 Finsbury Pavement, London EC2A 1NT at 10.00 a.m. on 17 December 2014.


A copy of the Circular will be available on the Company's website at The document has also been submitted to the National Storage Mechanism and will shortly be available for inspection at:

Exchange rates used for the purposes of calculating the consideration for the Acquisitions as set out in this announcement are: NOK10.524 to £1 and ISK198.37 to £1.

Defined terms used in this announcement have the meanings set out in the circular.





For further information, please contact:


Benchmark Holdings plc

Tel: 020 7920 3150

Malcolm Pye, CEO


Roland Bonney, COO

Amy Firth, Head of Communications

Cenkos Securities PLC

Tel: 020 7397 8900

Ivonne Cantu/Liz Bowman (NOMAD)

Russell Kerr (Sales)

Tavistock Communications

Tel: 020 7920 3150

Catriona Valentine / Niall Walsh / Keeley Clarke



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 existing Group has three 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 and Technical Publishing which effects technology transfer through online publishing and education. Benchmark operates internationally with offices in the UK, Ireland, Norway, USA, Brazil, China, Russia and Thailand and, as at 1 November 2014, employs 226 people.


For further information on Benchmark please visit


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

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