TIDMBMK
RNS Number : 8007T
Benchmark Holdings PLC
29 November 2021
29 November 2021
Information within this announcement is deemed by the Company to
constitute inside information under the Market Abuse Regulations
(EU) No. 596/2014.
Benchmark Holdings plc
("Benchmark", the "Company" or the "Group")
Full Year Results for the Financial Year ended 30 September
2021
Transformation and focused strategy delivering results
Benchmark, the aquaculture biotechnology Company, announces its
audited full year results for the year ended 30 September 2021 (the
"period").
-- Strong FY2021 results with increase in revenues of 18% (+24%
CER) and Adjusted EBITDA +34% (+43% CER) demonstrating the success
of the Company's transformation and focused strategy
-- Strong trading performance and strategic progress across our three business areas:
o Advanced Nutrition - return to growth driven by renewed
commercial focus and recovery in the shrimp markets; revenues
increased by 19% (+27% CER)
o Genetics - continued revenue growth +13% (+15% CER) and
significant investment and progress in growth opportunities
o Health - new sea lice solution Ectosan (R) Vet and CleanTreat
(R) launched in Norway and first sales achieved; treatments
delivering excellent efficacy
-- Disciplined investment in growth areas with capex totalling GBP23m
-- Cash and cash equivalents of GBP39.5m (available liquidity of GBP50.6m)
GBPm FY 2021 FY 2020 % AER % CER**
------------------------------------------- -------- -------- ------ --------
Revenue from continuing operations 125.1 105.6 +18% +24%
------------------------------------------- -------- -------- ------ --------
Adjusted
------------------------------------------- -------- -------- ------ --------
Adjusted EBITDA(1) from continuing
operations 19.4 14.5 +34% +43%
------------------------------------------- -------- -------- ------ --------
Adjusted EBITDA excluding FV uplift
from biological assets 16.1 11.2 +44% +54%
------------------------------------------- -------- -------- ------ --------
Adjusted Operating profit from continuing
operations(2) 10.8 7.9 +37% +52%
------------------------------------------- -------- -------- ------ --------
Statutory
------------------------------------------- -------- -------- ------ --------
Operating loss (5.4) (10.9) 50% 60%
------------------------------------------- -------- -------- ------ --------
Loss before tax from continuing
operations (9.2) (22.6) 59% 65%
------------------------------------------- -------- -------- ------ --------
Loss for the Period - total incl.
discontinued operations (11.6) (31.9) 64% 67%
------------------------------------------- -------- -------- ------ --------
Basic loss per share (p) (1.93) (5.26) 63%
------------------------------------------- -------- -------- ------ --------
Net debt(3) (80.9) (37.6)
------------------------------------------- -------- -------- ------ --------
Net debt excluding lease liabilities (56.9) (27.1)
------------------------------------------- -------- -------- ------ --------
** Constant exchange rate (CER) figures derived by retranslating
current year figures using previous year's foreign exchange
rates
(1) Adjusted EBITDA is EBITDA (earnings before interest, tax,
depreciation and amortisation and impairment), before exceptional
items including acquisition related expenditure.
(2) Adjusted Operating Profit is operating loss before
exceptional items including acquisition related items and
amortisation of intangible assets excluding development costs
(3) Net debt is cash and cash equivalents less loans and
borrowings
GBPm FY 2021 FY 2020 % AER % CER**
Continuing operations
Revenue
-------- -------- ------ --------
Genetics 46.8 41.5 +13% +15%
-------- -------- ------ --------
Advanced Nutrition 70.5 59.4 +19% +27%
-------- -------- ------ --------
Animal Health 7.8 5.2 +50% +50%
-------- -------- ------ --------
Adjusted EBITDA(1)
-------- -------- ------ --------
Genetics 11.5 14.4 -20% -20%
-------- -------- ------ --------
* Net of fair value movements in biological assets 8.2 11.1 -26% -27%
-------- -------- ------ --------
Advanced Nutrition 13.8 6.4 +116% +132%
-------- -------- ------ --------
Animal Health (2.7) (3.7) +27% +30%
-------- -------- ------ --------
** Constant exchange rate (CER) figures derived by retranslating
current year figures using previous year's foreign exchange
rates
(1) Adjusted EBITDA is EBITDA (earnings before interest, tax,
depreciation and amortisation and impairment), before exceptional
items including acquisition related expenditure.
Operational highlights
Advanced Nutrition
-- S trengthened commercial team under new leadership,
implemented processes and digital tools that focus on performance
and relaunched Artemia technologies
-- Invested in principal manufacturing facility in Thailand to
improve safety, resilience and energy efficiency while maintaining
supply and customer service levels
-- Post period end launched Natura pRo and ExL, a new feed
protocol to substitute rotifers (live feed) in sea bass and sea
bream hatcheries
Genetics
-- Continued growth in core salmon egg business
o Continuing ramp-up of Salten facility
o First production and sales of salmon eggs in Chile
o Established clear leading position in land-based salmon
segment
-- Commenced construction of new incubation centre in salmon egg
facility in Iceland to support periods of peak Progress towards
launch of SPR shrimp including continued test market sales,
expanded capacity in US and completion of JV multiplication centre
in Thailand
Health
-- Commercial launch of Ectosan(R) Vet and CleanTreat(R)
delivering a solution to one of the industry's biggest
sustainability challenges while protecting fish welfare and the
oceans
-- CleanTreat â received the highest level of recognition for environmental protection and sustainability by the Aquaculture Stewardship Council (ASC), the world's leading certification scheme for farmed aquaculture
-- Post period end Ectosan(R) Vet patent grant approved giving 20 year protection
Group
-- Culture change underpinned by new commercial focus,
remuneration policy and performance management framework
-- Actions to further integrate the Group and streamline the
organisation including co-location of Genetics and Health
activities in Norway and Chile
-- Good progress in all areas of ESG programme including
adoption of Net Zero targets and roadmap; first phase of climate
risk assessment and review of policies and disclosures to align to
best practice and standards
Current trading and outlook
-- Trading in line with FY22 expectations
o Consistency in performance continuing in Genetics and Advanced
Nutrition
o Health starts benefitting from Ectosan(R) Vet and
CleanTreat(R) revenue stream
-- Market environment
o Salmon markets are solid with positive outlook for continuous
growth
o Global shrimp markets showing recovery
o Sea bass and sea bream markets recovered and stable
Trond Williksen, CEO, commented:
"2021 was a very successful year for Benchmark with much
accomplished financially, operationally and strategically. The
Group delivered a strong financial performance across its three
business areas reflecting our new commercial focus and supported by
improving conditions, particularly in our important shrimp market
which had been hardest hit by the pandemic.
There is good momentum in our business helped by positive
conditions in our markets contributing to a good start to the new
financial year across all business areas, consistent with our
outlook for the year as a whole.
The aquaculture industry increasingly recognises the importance
of an integrated approach to sustainability across the value chain
which Benchmark is uniquely positioned to deliver through our range
of solutions, underpinning our focus on delivering profitable
growth."
Details of analyst / investor call today
There will be a webcast at 9 am UK time today for analysts and
investors. To register for the call please contact MHP
Communications on +44 (0)20 3128 8990 / 8742, or by email on
benchmark@mhpc.com
Enquiries
Benchmark Holdings plc Tel: 0114 240 9939
Trond Williksen, CEO
Septima Maguire, CFO
Ivonne Cantu, Investor Relations
Numis (Broker and NOMAD) Tel: 020 7260 1000
James Black, Freddie Barnfield, Duncan Monteith
MHP Communications Tel: 020 3128 8990 /
8742
Katie Hunt, Reg Hoare, Alistair de Kare-Silver, benchmark@mhpc.com
Charlie Protheroe
About Benchmark
Benchmark's mission is to enable aquaculture producers to
improve their sustainability and
profitability.
We bring together biology and technology, to develop innovative
products which improve yield, quality and animal health and welfare
for our customers. We do this by improving the genetic make-up,
health and nutrition of their stock - from broodstock and hatchery
through to nursery and grow out.
Benchmark has a broad portfolio of products and solutions,
including salmon eggs, live feed
(Artemia), diets and probiotics and sea lice treatments. Find
out more at www.benchmarkplc.com
Performance
2021 was a very successful year for Benchmark with much
accomplished financially, operationally and strategically. The
Group delivered a strong financial performance across its three
business areas with Revenue and Adjusted EBITDA 18% and 34% above
last year respectively, reflecting our renewed commercial focus and
supported by improving conditions in our core shrimp market. We
reported a loss before tax of GBP9.2m which narrowed significantly
from GBP22.6m in 2020, taking us a step closer to becoming
profitable.
The COVID-19 pandemic remained a predominant feature throughout
the year, presenting challenges including regional lockdowns,
significant supply chain disruptions and increases in the cost of
logistics. This called for continuous operational flexibility, the
dedication and focus of our teams around the world, and a sustained
effort to support the health, safety and well-being of our people.
We remained resilient and able to serve our customers in the face
of significant logistical challenges affecting many sectors of the
global economy.
Strategically, we achieved an important milestone for the Group
and for the aquaculture industry with the launch of our sea lice
treatment Ectosan(R) Vet and CleanTreat(R) , a solution that
addresses one of the largest sustainability challenges in salmon
production as well as an important environmental challenge by
avoiding ocean contamination. We continued to invest with
discipline to grow organically in our core established areas
including salmon genetics and Advanced Nutrition, as well as in new
growth markets such as SPR shrimp and tilapia genetics.
Strategy
The Board continues to review the near and longer term
opportunities available to the Group, and the means and resources
required to realise these. Our strategy is unchanged. We remain
focused on our goals to become the leading aquaculture
biotechnology Company driving sustainability and to deliver
profitable growth for our shareholders. We will continue to focus
on our three business areas - Genetics, Advanced Nutrition and
Health - which all play a critical role in the aquaculture value
chain and represent attractive growing markets. The importance of
an integrated sustainability approach across the aquaculture value
chain is increasingly recognised, and this represents an important
opportunity for Benchmark through our positioning in genetics,
specialist nutrition and health, three critical areas for our
customers.
We will continue to invest with discipline in our established
businesses to grow from our core, building on our strong market
positions. Projects in this area include the expansion of our
facility in Iceland and investment in our tilapia facility in the
US. We will also continue to invest in the new areas of growth
which we are currently pursuing, including the roll-out of
Ectosan(R) Vet and CleanTreat(R) and SPR shrimp, and continue to
develop further growth opportunities.
Having an optimal capital structure will be a critical enabler
of our strategy creating flexibility for the business, and this
year the Board commenced a review of our capital structure in the
context of the approaching maturity of the NOK 850m bond in 2023
and funding in the short term for investment opportunities to
accelerate business area growth.
Going concern
The Board has reviewed the Group's forecast for the period to
September 2023 and while there is material uncertainty surrounding
renewal or replacement of the Group's financing facilities in 2023,
the Directors are confident that these can be renewed or replaced
before they expire, with trading going well despite the headwinds
of the pandemic and relationships with finance providers strong.
The Board therefore concluded that it remains appropriate to
prepare the financial statements on a going concern basis.
Our people and our culture
Our talented, diverse team is one of our most important assets
and an area of focus for the Board this year. Following the
significant reorganisation in 2020, it was essential to realign our
culture to our new strategic goals. Core elements of this effort
included redefining our corporate values and implementing a new
performance management framework and remuneration policy across the
organisation. Our people embraced the change, demonstrated in
excellent results in the employee engagement survey conducted
during the year. We are proud of our inclusive culture which
promotes diversity at all levels of the organisation - an important
ESG factor for our business.
Board
Hugo Wahnish retired from the Board on 9 February 2021. A Board
review conducted during the year shows there is a good balance of
skills amongst Board members, and each is performing both their
fiduciary and other Board roles
to a high standard. The Board culture is good, supportive but
challenging of management, steering the Company
to a sustainable future.
Sustainability
Benchmark is a business with a purpose - to drive sustainability
in aquaculture. Aquaculture plays an increasingly important role in
safeguarding the world's food supply in a way that contributes to
sustainable development. Driven by committed people with a desire
to make a difference, our solutions make the aquaculture industry
more efficient and sustainable by improving yield, resource
efficiency and animal welfare, while mitigating the environmental
impact. ESG considerations are embedded in our strategy and
decision-making, and in our governance structure through our
Board's sustainability committee. We operate responsibly, aiming
for continuous improvement, and are committed to report on our ESG
progress in a transparent way. A tangible example of our work this
year is the development of a roadmap towards achieving our net zero
goals leading to investments in several of our facilities in this
area and commencing a climate risk assessment for the Group in
alignment with TCFD recommendations ("Task Force for
Climate-Related Financial Disclosures").
Outlook
We have laid solid foundations for our business with a clear
strategy, financial discipline, culture and operational focus.
Together with the good momentum we are seeing in each of our
business areas and the growing need in our markets for sustainable
aquaculture solutions, this creates a positive outlook in the near
and the long term. We remain focused on becoming profitable and on
delivering profitable growth for our shareholders through
disciplined investment.
On behalf of the Board I would like to congratulate our
management team and all our employees for an excellent performance
and to thank our customers and shareholders for their continued
support.
Peter George
Chairman
Chief Executive Officer's Review
FY21 was a year of laying firm foundations following a
substantial reorganisation. We have reached our targets,
establishing the base from which we can realise the potential
Benchmark has with its unique position in the market.
In FY21, we embedded a new strategic identity and undertook a
significant culture transformation. We developed new corporate
values and a performance management framework aligned to our
strategy, creating a shift towards a more commercial and focused
organisation. With the benefit of a streamlined Group and increased
management focus as well as recovery in our core shrimp markets, we
delivered revenues of GBP125.1m and Adjusted EBITDA of GBP19.4m,
18% and 34% above last year respectively. On a constant currency
basis, revenue grew by 24% and Adjusted EBITDA increased by 43%.
Loss before tax improved from GBP22.6m in 2020 to GBP9.2m in
2021.
Our strategic priorities framework enabled us to direct
management time and resources, and as a result we made significant
progress across the board. A top priority this year was the launch
of our innovative sea lice treatment Ectosan(R) Vet and
CleanTreat(R) in Norway and this was achieved in August 2021. The
launch was the culmination of a rigorous regulatory process
including the ratification of the Maximum Residue Limit ("MRL") and
a Marketing Authorisation in Norway. We are now in a position where
we can look forward to benefit from a new income stream and
earnings in our Health business - which has been an area of
consistent investment over the years.
A second priority in FY21 was to strengthen our position in the
shrimp hatchery market, particularly in Artemia. Under new
leadership, we implemented a new commercial model focused on
performance, increasing the use of digital channels, technical
services and specialist education to engage with our customers.
This resulted in an increase in Artemia revenues of 22%,
significantly offsetting the impact of a tactical price reduction
implemented in FY20.
The integration of the Group continues to be a priority in order
to realise the potential that our unique strategic positioning
provides. During the year, we made good progress bringing together
our innovation, strategy development and sustainability efforts
across our three business areas. In addition, we simplified our
corporate structure and co-located activities in a number of
countries in which we are present.
We made progress towards the launch of our SPR shrimp,
continuing our test market sales and building the infrastructure
required to support a commercial launch in FY22.
Looking forward to FY22 and beyond, we have significant
opportunities which will make Benchmark a cash- generative,
profitable, and growing Group. We will keep our focus on the
execution of our near-term growth opportunities, while maintaining
our strong position in our established markets supported by
disciplined investment and cost control. This will enable us to
achieve our goal to become profitable and deliver value for all of
our stakeholders.
Business area reviews
Genetics
Genetics reported revenue from continuing operations of
GBP46.8m, 13% above last year, driven primarily by higher salmon
egg sales. Adjusted EBITDA of GBP11.5m was 20% below FY20. The
Adjusted EBITDA result primarily reflects costs in our new genetics
growth areas and normalised R&D investment.
Strategically, we continued to invest to build on our stronghold
in salmon to cover all production paradigms including land-based
and ocean farming. To this end, we built a new incubation centre in
Iceland in the year which will allow us to meet periods of peak
demand, and represents the first step to increase capacity in
Iceland to meet the demand from the emerging land-based sector
where we have built a dominant position. We continued with the test
market for our shrimp genetics while we increased capacity in our
Fellsmere facility to 100,000 breeders and commenced seeding of JV
multiplication centre in Thailand in preparation for a gradual
commercial launch in FY22. We revisited our strategy in tilapia
with the goal of maintaining a small but profitable presence in key
tilapia markets and growing as the market matures. Our genetics
consultancy services play an important role in maintaining our
competitive position, giving us visibility and access to
state-of-the-art technologies as well as strongly positioning the
Group to enter new aquaculture species in the future.
Advanced Nutrition
Advanced Nutrition reported revenue from continuing operations
of GBP70.5m, 19% ahead of FY20 driven by increased sales in the
three product areas - Artemia, Health and Diets - with significant
growth in Asia, India and Indonesia in particular, offsetting a
drop in the Americas due to poor market conditions, particularly in
Ecuador. Adjusted EBITDA of GBP13.8m more than doubled (FY21:
GBP6.4m) as a result of higher sales and margins and continued cost
control.
Our strategy in Advanced Nutrition is to stay highly
specialised, addressing areas where our technology-rich solutions
can have significant impact for our customers. By focusing on the
early stages of aquaculture production with specialised nutrition
and health solutions we can increase the productivity and
sustainability throughout the production cycle, creating value for
our customers. We will build on our unique competencies - our
leading market position and distribution infrastructure - through a
stronger commercial drive and ongoing investment in innovation. We
will also invest selectively in our facilities to support our
growth and align the energy efficiency in our operations towards
achieving our net zero goals.
Health
In Health, we reported revenue from continuing operations of
GBP7.8m, 50% ahead of the prior year reflecting the Group's first
Ectosan(R) Vet and CleanTreat(R) sales and higher sales of
Salmosan(R) Vet. Adjusted EBITDA loss was GBP2.7m (FY20: GBP3.7m)
with the improvement resulting from higher sales and lower R&D
investment which offset higher operating costs relating to the
launch of Ectosan(R) Vet and CleanTreat(R) .
The roll-out in Norway of Ectosan(R) Vet and CleanTreat(R) will
continue to be our main priority. It is fair to say that we are
still in the early stages of commercialisation, working with
existing and potential customers to help them integrate the
solution into their sea lice treatment strategy. As expected, this
takes both effort and time. The good news is that the interest for
the solution is good and that the experience so far confirms the
excellent efficacy of the medicine and the technical performance of
the CleanTreat(R) system.
We are also pursuing an extension of the Marketing Authorisation
in Norway which will allow us to achieve higher margins in the
coming years. We have completed the first step in the process which
is making a regulatory submission.
In addition, we are working on developing the potential for
CleanTreat(R) as a platform for sustainable bath treatments which
would represent an important development for the aquaculture
industry as a whole. Post period end, CleanTreat(R) received the
highest level of recognition for environmental protection and
sustainability by the Aquaculture Stewardship Council, a
significant achievement.
Outlook
There is good momentum in our business supported by positive
conditions in our markets. The salmon markets are stable with
positive outlook for continuous growth, while the shrimp markets
experienced significant recovery in FY21 and are expected to
continue to grow.
More broadly, aquaculture is one of the fastest growing areas in
food production owing to a rise in population and wealth as well as
health and climate change awareness. In order for the industry to
grow sustainably and meet the increasing demand, sustainable
solutions are required that address fish health and welfare,
resource efficiency, antimicrobial resistance, environment and
biodiversity. There is increasing recognition of the importance of
an integrated approach to sustainability across the aquaculture
value chain, and Benchmark is uniquely positioned through our
solutions positioned in the critical stages of production.
Trond Williksen
Chief Executive Officer
Financial Review
Introduction
Strong operational delivery together with progress on strategic
objectives
I am pleased that we have been able to deliver a strong set of
results based on clear commercial focus in all business areas while
progressing our strategic objectives. We made significant
investments in the year across our three business areas, both to
maintain our strong position in our well-established businesses as
well as to develop new areas of growth. We made capital investments
totalling GBP23.0m in the year of which GBP11.3m related to our
established businesses, mainly improvements to our Advanced
Nutrition facility in Thailand and a new incubation centre in
Iceland. Looking forward, we will leverage off this year's
investment to grow and progress our in path to profitability and
cash generation which we remain committed to.
Financial highlights
-- Revenues from continuing operations were 18% above the prior year resulting from:
o 19% increase in Advanced Nutrition revenues (+27% in constant
currency) showing good signs of recovery and strong commercial
focus.
o Good performance in Genetics with revenues 13% above the prior
year (+15% in constant currency).
o Higher revenues in Health due to the first sales of Ectosan(R)
Vet and CleanTreat(R) .
-- Adjusted EBITDA(2) from continuing operations was GBP19.4m
against GBP14.5m the prior year reflecting strong revenues in
Advanced Nutrition, with a strong second half for Genetics and
first sales from Ectosan (R) Vet and CleanTreat (R) in Health.
-- Liquidity and net debt
Liquidity (cash and available facility) decreased to GBP50.6m
(2020: GBP83.2m) and cash at year end of GBP39.5m (2020:
GBP71.6m).
o Net debt increased to GBP80.9m (2020: GBP37.6m) reflecting a
programme of investments in the year and working capital to support
momentum in the business.
-- Loss before tax decreased from GBP22.6m to GBP9.2m.
Overview of reported financial results
During 2021, the Group's focus was on delivering a strong
commercial result and advancing the strategic priorities of the
Group.
Advanced Nutrition returned to growth in 2021 despite continuing
challenging conditions in some key shrimp markets. Genetics also
experienced strong sales in the year resulting in an increase in
Group revenue from continuing operations of 18% to GBP125.1m in the
year (2020: GBP105.6m). This increase in sales meant that Gross
Profit from continuing operations increased to GBP65.6m (2020:
GBP55.0m). Gross Margin was flat at 52% (2020: 52%). Using the same
foreign exchange rates experienced in 2020 (constant currency(5) )
revenue from continuing operations increased by 24%.
As Reported (GBPm unless otherwise stated) 2021 2020 % AER % CER(5)
--------------------------------------------------- ------ ------ ----- --------
All figures are from continuing operations unless stated
Total revenue - including discontinued operations 125.1 120.4 4% 9%
Revenue 125.1 105.6 18% 24%
Operating loss (5.4) (10.9) 50% 60%
Loss before tax (9.2) (22.6) 59% 65%
Loss for the period - including discontinued
operations (11.6) (31.9) 64% 67%
Basic loss per share (p) (1.93) (5.26) 63% -
--------------------------------------------------- ------ ------ ----- --------
Adjusted Measures (GBPm unless otherwise stated) 2021 2020 % AER % CER(5)
------------------------------------------------- ------ ------ ------ --------
Gross profit 65.6 55.0 19% 24%
Gross profit % 52% 52% - -
Adjusted EBITDA(2) 19.4 14.5 34% 43%
Total Adjusted EBITDA(2) 19.4 5.8 234% 259%
Adjusted EBITDA(2) margin % 16% 14% - -
Adjusted Operating Profit(3) 10.8 7.9 37% 52%
Net debt(4) (80.9) (37.6) (115%) -
------------------------------------------------- ------ ------ ------ --------
Business area performance
Revenue AEBITDA (2)
=============================== =================================================
AEBITDA AEBITDA
Continuing margin margin
Operations Actual Actual % %
Actual Actual
Revenue (GBPm) 2021 2020 % AER % CER(5) 2021 2020 % AER % CER(5) 2021 2020
------------------- ------ ------ ----- -------- ------ ------ ----- -------- ------- -------
Genetics 46.8 41.5 13% 15% 11.5 14.4 (20%) (20%) 25% 35%
Advanced Nutrition 70.5 59.4 19% 27% 13.8 6.4 116% 132% 20% 11%
Health 7.8 5.2 50% 50% (2.7) (3.7) 27% 30% (35%) (71%)
All other segments - - - - - (0.5) 100% 100%
Corporate 4.8 4.9 (2%) (2%) (3.2) (2.1) (52%) (52%)
Inter-segment
sales (4.8) (5.4) (11%) (11%) - - - -
------------------- ------ ------ ----- -------- ------ ------ ----- -------- ------- -------
Total Group 125.1 105.6 18% 24% 19.4 14.5 34% 43% 16% 14%
------------------- ------ ------ ----- -------- ------ ------ ----- -------- ------- -------
Genetics excluding
FV uplift 46.8 41.5 13% 15% 8.2 11.1 (26%) (27%) 18% 27%
------------------- ------ ------ ----- -------- ------ ------ ----- -------- ------- -------
Group Exc FV
uplift 125.1 105.6 18% 24% 16.1 11.2 44% 54% 13% 11%
------------------- ------ ------ ----- -------- ------ ------ ----- -------- ------- -------
1 EBITDA is earnings/(loss) before interest, tax, depreciation
and amortisation and impairment. See income statement.
2 Adjusted EBITDA is EBITDA(1) , before exceptional items and
acquisition-related expenditure. See income statement.
3 Adjusted Operating Profit is operating loss before exceptional
items including acquisition-related items and amortisation of
intangible assets excluding development costs.
4 Net debt is cash and cash equivalents less loans, borrowings
and lease obligations. Net debt includes GBP24.0m (FY20: GBP10.5m)
relating to lease obligations.
5 % CER is the change year on year translating current figures
using last year's foreign exchange rates.
We continued to manage costs across the Group very closely
during the year. Operating costs from continuing operations
increased by 15% to GBP38.2m (2020: GBP33.3m) due to the investment
in new growth areas, mainly the ramp up of activities for the
launch of Ectosan(R) Vet and CleanTreat(R) . Expensed R&D from
continuing operations decreased by 4% to GBP7.0m (2020:
GBP7.3m).
Adjusted EBITDA from continuing operations increased by 34% to
GBP19.4m (2020: GBP14.5m) driven by increased sales in Advanced
Nutrition and first sales for Ectosan(R) Vet and CleanTreat(R) in
Health as well as ongoing cost control.
Adjusted measures
We continue to use adjusted results as our primary measures of
financial performance. We believe that these adjusted measures
enable a better evaluation of our underlying performance. This is
how the Board monitors the progress of the Group.
In line with many of our peers in the sector we highlight
expensed R&D on the face of the income statement separate from
operating expenses. Furthermore, we report earnings before
interest, tax, depreciation and amortisation ("EBITDA") and EBITDA
before including exceptional and acquisition- related items
("Adjusted EBITDA"). The activities of the Group's equity accounted
investees are closely aligned with the Group's principal
activities, as these arrangements were set up to exploit
opportunities from the Intellectual Property ("IP") held within the
Group. As a result, to ensure that adjusted performance measures
are more meaningful, the Group's share of the results of these
entities is included within Adjusted EBITDA. In addition, in line
with the Salmon industry, we also report AEBITDA excluding fair
value uplift under IAS 41. We also report this adjusted measure
after depreciation and amortisation of capitalised development
costs ("Adjusted Operating Profit") as the Board consider this
reflects the result after taking account of the utilisation of the
recently expanded production capacity. Available liquidity, being
cash and undrawn facilities, is an important metric for management
of the business as it gives a measure of the available liquid funds
and is also a key financial covenant in the Group's main debt
facilities.
Genetics
Genetics delivered good growth in revenue driven by sales of
salmon eggs where volumes increased by 14% to 242 million eggs.
Revenues of GBP46.8m were up 13% (2020: GBP41.5m), +15% in constant
currency.
Demand for eggs in Norway increased significantly by 42% during
the year, this increase was partly offset by the expected decrease
of demand for eggs from Scotland where we had benefitted in 2020
from the loss of infectious salmon anaemia ("ISA") free status in
Norway which constrained exports. This resulted in increased
revenues from salmon eggs of 16% to GBP30.9m (2020: GBP27.0m).
Within these numbers, our Chilean salmon eggs facility also
commenced Sales in 2021 with revenue of GBP0.5m.
In non-product based revenue streams, Genetics Services were
consistent in the year reflecting the strength and depth of
expertise of our Genetics team and our IP in the business,
contributing GBP1.3m (2020: GBP1.3m). Revenues from harvested fish
were aided by increased sales of fish from our broodstock licence
in the first full year of operation, producing harvest income in
the year of GBP6.2m (2020: GBP3.9m). Royalties earned from use of
our genetic IP fell in the year, with sales down to GBP1.0m (2020:
GBP1.8m) due to the expected unwinding of contracts which will
continue for the next two years. Sales of other products such as
lumpfish recorded slightly lower volumes in the year, with revenues
of GBP7.4m (2020: GBP7.5m).
Gross profit decreased by 2.6% in 2021 to GBP25.9m (2020:
GBP26.6m) due to increased costs of GBP0.8m from our Chilean salmon
eggs facility as it continues to ramp up and lower gross profit
from our harvest income of GBP0.8m as margins fell due to lower
salmon prices and higher costs. This was offset by a combination of
higher volumes from our core salmon business of GBP0.4m and
improved gross profit from tilapia by GBP0.5m. The non-cash fair
value increase in biological assets remained flat at GBP3.3m. This
resulted in gross margin % falling by 9% to 55% (2020:64%).
Whilst demand for salmon remained relatively solid through the
COVID-19 related turmoil, as noted previously, shrimp demand was
significantly affected. As a result, in 2020 we decided to postpone
the planned commercial launch of our specific pathogen resistant
("SPR") shrimp. Therefore, in FY21, we focused our efforts on
developing the next generation of breeders by running additional
market trials. We also continued our test market sales in tandem.
As our SPR shrimp programme and facility remain in development
phase, some of the costs associated with it are capitalised. In
2021, we capitalised GBP1.9m of development costs in intangibles
and reported an AEBITDA loss of GBP0.9m in the shrimp business.
When we commence the commercial launch of the SPR shrimp,
capitalisation will cease, and all costs associated with the
facility will flow into AEBITDA.
R&D spend and operating costs were higher than 2020 by
GBP1.0m and GBP0.4m respectively as in H2 2020 Genetics had paused
all discretionary spend, resuming spend (particularly in R&D)
in 2021. R&D activities in this business area are focused on
developing the traits of growth, disease resistance and sea lice
resistance by selecting the best performing animals from each
generation. The search for markers for new traits that can be
included in the breeding programme continues.
The share of profits/losses from the equity accounted investees
relates primarily to the joint venture with Salmar Genetics AS
which delivered a share of loss of GBP0.5m (2020: Profit of
GBP0.3m). This loss was due to a disease outbreak which resulted in
a year-on-year reduction in earnings of GBP0.8m.
Shrimp and tilapia, both of which are areas of investment,
delivered combined losses in the period of GBP1.4m (2020:
GBP1.7m).
All these factors contributed to reduced AEBITDA of GBP11.5m
(2020: GBP14.4m) and AEBITDA margin of 25% (2020: 35%). AEBITDA
excluding fair value dropped by 26% to GBP8.2m, an AEBITDA margin
of 18% (2020: 27%).
Genetics has continued to establish its facility in Chile and
with overall AEBITDA losses of GBP2.6m and GBP1.3m invested in
capex in this new facility in 2021. The facility has potential
production capacity of 50 million eggs and is currently utilising
capacity of around 30 million eggs. In addition, we have invested
in expanding capacity in our Fellsmere facility in Florida which
houses our Shrimp breeder operations and have added significant
additional incubation capacity in Iceland.
Advanced Nutrition
Throughout 2021, Advanced Nutrition delivered a strong
performance driven by renewed commercial focus. As a result,
revenues in Advanced Nutrition increased by 19% in the year (27% at
CER). This is notable as some key markets continued to be impacted
by COVID-19 and the business faced significant logistic challenges
as a result of the pandemic. The strategic price cuts put in place
in 2020 have allowed us to regain market share and the continued
focus of the commercial team has created good sales momentum in
this business area.
In 2021, 25% of our revenues derived from the Mediterranean sea
bass and sea bream sector, which grew by 26% in the year.
By product area, we regained market share in all product areas.
Artemia grew revenues by 22% (at CER) to GBP32.6m, followed by
diets up 33% (at CER) to GBP30.6m. Health which covers our
probiotic and environmental pond management portfolio grew revenues
by 18% (at CER) to GBP7.2m.
The increase in sales of GBP11.1m resulted in an increase in
gross margin of GBP8.8m and drove the gross margin up from 46% to
51%. This increase in margin was offset in part by a small cost
increase in operating costs, but there continued to be good cost
control throughout this year. This led to Advanced Nutrition
reporting AEBITDA from continuing operations of GBP13.8m (2020:
GBP6.4m) and an increase in AEBITDA margin from 11% to 20%.
Health
Health reported continuing revenue of GBP7.8m (2020: GBP5.2m)
reflecting the first sales of Ectosan(R) Vet and CleanTreat(R) of
GBP2.5m of which GBP0.7m relates to revenue for vessel-related
costs and a marginal increase in sales of our existing sea lice
treatment, Salmosan(R) of GBP5.3m (2020: GBP5.2m). FY21 Salmosan(R)
revenues reflect increased sales to Norway, Canada, UK and Faroes
offset by a decrease in sales to Chile.
Gross margin increased by GBP2.5m to GBP3.7m with the launch of
Ectosan(R) Vet and CleanTreat(R) combined with increased margins
from Salmosan(R) .
During the year, the focus of this business area was to obtain
the Marketing Authorisation for Ectosan(R) Vet and launch the
product along with the CleanTreat(R) environmental system in
Norway. The MA was granted in July 2021 and the first vessel was
launched in August 2021. GBP2.6m (2020: GBP2.1m) of development
costs were capitalised in the year. The second vessel was launched
post period-end in October 2021 and will commence treatments in
December 2021. These activities drove an increase in operating
costs to GBP6.2m (2020: GBP3.0m) Adjusted EBITDA loss for the
business area was GBP2.7m (2020: GBP3.7m).
Exceptional items
Items that are material because of their nature whose
significance is sufficient to warrant separate disclosure and
identification within the consolidated financial statements are
referred to as exceptional items. The separate reporting of
exceptional items helps to provide an understanding of the Group's
underlying performance.
During 2020 a significant amount of non-core operations were
either closed or disposed and a significant reorganisation of the
Group occurred.
Exceptional expenses within continuing operations of GBP0.2m
include costs in relation to disposals in FY20 of GBP0.6m and
management restructuring of GBP0.5m (2020: GBP2.1m - GBP0.6m
related to aborted acquisition items and GBP1.5m from management
restructuring) being offset against a release of contingent
consideration of GBP0.9m related to the purchase of Benchmark
Genetics (USA) Inc.
In 2020 exceptional gains within discontinued operations of
GBP5.1m included gains and losses from the disposal programme of
GBP12.0m and other closure and restructuring costs.
Depreciation, amortisation and impairments
Depreciation and impairment of tangible assets of GBP8.4m (2020
continuing: GBP6.6m), with depreciation charge of GBP8.5m (2020
continuing: GBP5.8m) and impairment reversal of GBP0.1m (2020
continuing: GBP0.8m charge). The depreciation charge in the year
has increased due to the launch of CleanTreat(R) where the vessels
are right-of-use assets held under lease agreements. In total
depreciation charges on leased assets under IFRS 16 is GBP3.3m
(2020 continuing: GBP1.2m). In 2020 depreciation and impairment of
GBP2.5m was included in discontinued operations.
Amortisation and impairments of intangible assets totalled
GBP16.3m (2020: GBP16.6m continuing and GBP2.8m discontinued). The
amortisation charge includes GBP0.3m (2020: GBPnil) relating to
capitalised development following commercialisation of Ectosan(R)
Vet and CleanTreat(R) .
Research and development
Expenses Total expensed and capitalised
================================ ====================================
As % As % As % As %
GBPm Continuing 2021 of sales 2020 of sales 2021 of sales 2020 of sales
------------------------------- ---- --------- ---- --------- ----- ----------- ---- ----------
Expensed R&D by business area
Genetics 4.9 10% 3.8 9% 6.8 15% 5.4 13%
Advanced Nutrition 1.9 3% 1.5 3% 2.2 3% 2.1 4%
Health 0.2 3% 2.0 38% 2.8 36% 4.4 85%
------------------------------- ---- --------- ---- --------- ----- ----------- ---- ----------
Total research and development 7.0 6% 7.3 7% 11.8 9% 11.9 11%
------------------------------- ---- --------- ---- --------- ----- ----------- ---- ----------
Expensed R&D activities in the continuing business decreased
in the year by GBP0.3m with Genetics increasing their activities on
the main focus of their spending, their breeding nucleus. This was
against a backdrop of reduced spending in 2020 as we paused
discretionary spending. This increase was offset by reduced Health
spending due to their significantly reduced R&D programmes.
Genetics' research is focused around continually developing new
disease and parasitic resistant traits as well as growth traits
which we can breed into our products. Advanced Nutrition's focus is
on expanding our product portfolio and driving growth through
product improvements, including the Rotifer replacement diet which
is being launched in Q1 FY22. Health's research was mainly focused
around the Ectosan(R) Vet and CleanTreat(R) development
programme.
Other operating costs
Expenses
================================
As % As %
GBPm Continuing 2021 of sales 2020 of sales
------------------------------------ ---- --------- ---- ---------
Operating Expenses by Business Area
Genetics 8.9 19% 8.5 20%
Advanced Nutrition 19.9 28% 19.3 32%
Health 6.2 79% 3.0 58%
Corporate (net) 3.2 2.5
------------------------------------ ---- --------- ---- ---------
Total operating expenses 38.2 31% 33.3 32%
------------------------------------ ---- --------- ---- ---------
Other operating costs for the continuing business increased from
GBP33.3m in 2020 to GBP38.2m in 2021. The increase in costs was
primarily due to increased costs in Health as we moved toward and
executed the commercial launch of Ectosan(R) Vet and CleanTreat(R)
during the year.
Discontinued operations
All operations in the Knowledge Services business area and
certain areas of the Health business were discontinued in 2019 and
2020 and either disposed or ceased during 2020. This resulted in
net profit from the disposals of GBP12.0m, a loss from discontinued
operations of GBP9.2m and GBP8.7m AEBITDA loss being reported as
discontinued operations, all in 2020.
Net finance costs
The Group incurred net finance costs from continuing operations
of GBP3.8m during the year (2020: GBP11.7m). Included within this
was interest charged on the Group's interest-bearing debt
facilities of GBP6.9m (2020: GBP7.9m). Further, net foreign
exchange gains of GBP2.8m (2020: net loss of GBP2.2m) arose due to
the movement in exchange rates and there was a gain of GBP1.3m
(2020: GBP1.2m charge) relating to the fair value change in the
cross currency hedge associated with the NOK bond.
Statutory loss before tax
The loss before tax from continuing operations for the year at
GBP9.2m is lower than the prior year (2020: loss of GBP22.6m) as a
result of the positive trading result and lower net finance costs
partially offset by the increased depreciation on right-of-use
assets.
Taxation
There was a tax charge on the loss for the year of GBP2.4m
(2020: charge of GBP0.2m), mainly due to overseas tax charges in
Genetics and Advanced Nutrition, partially offset by deferred tax
credits on intangible assets mainly arising on consolidation from
acquisitions.
Reported loss for the year
The loss for the year after discontinued operations was GBP11.6m
(2020: loss of GBP31.9m). 2020 included an after tax loss from
discontinued operations of GBP9.2m.
Earnings per share
Basic loss and diluted loss per share were both -1.93p (2020:
loss per share -5.26p). The movement year on year is due to the
movement in the result as well as the increase in the weighted
average number of shares in issue of 44m.
Dividends
No dividends have been paid or proposed in either 2021 or 2020
and the Board is not recommending a final dividend in respect of
the year ended 30 September 2021.
Biological assets
A feature of the Group's net assets is its investment in
biological assets, which under IAS 41 are stated at fair value. At
30 September 2021, the carrying value of biological assets was
GBP38.4m (2020: GBP32.5m). This increase is due principally to the
increase in the biomass of broodstock as we continue to expand
production at Salten and Chile. The fair value uplift on biological
assets included in cost of goods for the year was GBP3.3m
(2020:GBP3.3m).
Intangibles
Additions to intangibles were GBP5.0m (2020: GBP5.6m) with the
main area of investment being capitalised R&D which in the year
increased by GBP0.2m to GBP4.8m (2020: GBP4.6m). R&D costs
related to products that are close to commercial launch have to be
capitalised when they meet the requirements set out under IAS 38.
In this financial year, the main development projects capitalised
were as follows:
-- Ectosan(R) Vet/CleanTreat(R) (GBP2.6m)
-- SPR shrimp (GBP1.9m)
-- Live food alternative diets (GBP0.3m)
In 2020, the majority of the amounts capitalised related to
Ectosan(R) Vet/CleanTreat(R) as we moved towards obtaining the
Marketing Authorisation for Ectosan(R) Vet and the continued
development of the CleanTreat(R) environmental solution.
Capital expenditure
During 2021, we have invested in a number of growth initiatives
as discussed before in the Business Area Performance review. The
Group incurred tangible fixed asset additions of GBP18.0m (2020:
GBP5.9m) of which GBP4.9m related to our investment in
CleanTreat(R) and mobilisation of the vessels on which
CleanTreat(R) is situated. The remaining capex was associated with
our Genetics business (GBP8.4m) where we are investing in a new
incubation house for our Icelandic facility (GBP4.0m), expanding
our SPR shrimp facility to support more capacity (GBP0.9m) and have
completed work in our Chilean facility (GBP0.8m) and our Advanced
Nutrition business (GBP4.7m) in which we invested GBP3.2m to
improve the fire safety of our Thailand manufacturing facility.
Cash flow, liquidity and net debt
Movement in net debt
Movement in net debt GBPm
---------------------------------- ------
Net debt at 30 September 2020 (37.6)
Cash generated from operations 22.0
Movement in working capital (11.6)
Investment in associates (0.6)
Interest and taxes (12.2)
Capital expenditure (22.6)
Own shares issued 0.8
New leases (IFRS 16) (18.6)
Other non-cash movements (1.0)
Foreign exchange on cash and debt 0.5
---------------------------------- ------
Net debt at 30 September 2021 (80.9)
---------------------------------- ------
Cash flow
Better than expected trading in Nutrition along with first
revenues from the launch of Ectosan(R) Vet with CleanTreat(R) drove
positive cash flow from operations which has resulted in a cash
inflow from operations in the year of GBP22.0m (2020: outflow of
GBP7.2m); this also drove higher working capital levels resulting
in an outflow of GBP11.6m (2020: inflow of GBP5.2m). Capital
expenditure, both intangible and tangible in 2021 showed a
significant increase of GBP10.8m at GBP22.6m (2020: GBP11.8m).
Borrowing facilities
The Group has a NOK850m senior secured floating rate listed bond
which matures in June 2023 with a coupon of 5.25% above three
months Norwegian Interbank Offered Rate ("NIBOR"). The Group also
has a USD 15m Revolving Credit Facility ("RCF") which matures in
December 2022 and was undrawn at 30 September 2021. The interest
rate on the facility is between 3% and 3.5% above LIBOR depending
on leverage.
There are other borrowing facilities held within Benchmark
Genetics Salten AS (formerly SalmoBreed Salten AS) which were put
in place to fund the building of the new salmon eggs facility
totalling NOK246m (GBP20.9m) (2020: NOK281m (GBP23.2m)), which are
ringfenced without recourse to the other parts of the Group.
Interest on these other debt facilities ranges between 2.65% and 5%
above Norwegian base rates. In addition, a working capital facility
of NOK20m is in place for use solely by Benchmark Genetics Salten
AS. This facility is undrawn (2020: drawn NOK15m).
During the year, the Board commenced a review of our capital
structure in the context of the approaching maturity of the main
facilities as noted above and with regard to funding in the short
term for investment opportunities to accelerate business area
growth.
Covenants
Banking covenants for the NOK bond and RCF exist in relation to
liquidity and an 'equity ratio'. Liquidity, defined as 'freely
available and unrestricted cash and cash equivalents, including any
undrawn amounts under the RCF', must always exceed the minimum
liquidity value, set at GBP10m. Available liquidity at 30 September
2021 is GBP50.6m (2020: GBP83.2m). The equity ratio, defined as
'the ratio of Book Equity to Total Assets' must always exceed 30%.
The equity ratio at 30 September 2021 was 58% (2020 60%). In
addition, an equity to asset ratio covenant exist for the Benchmark
Genetics Salten AS with a target threshold of 40% (2021 Actual
46.2%).
Cash and total debt
GBPm
==============
Net debt 2021 2020
------------------ ------ ------
Cash 39.5 71.6
NOK850m bond (75.5) (75.5)
Other borrowings (20.9) (23.2)
Lease liabilities (24.0) (10.5)
------------------ ------ ------
Net debt (80.9) (37.6)
------------------ ------ ------
The RCF facility combined with the year-end cash balance of
GBP39.5m (2020: GBP71.6m) means the Group had total liquidity of
GBP50.6m (2020: GBP83.2m). This, whilst utilising tight cost and
cash control, is expected by the Directors to provide the Group
with sufficient liquidity to fund the investment and working
capital to crystalise the growth opportunities which are part of
the strategic priorities of the Group and provide adequate
headroom.
Going concern
After a good year of trading and the start of recovery in our
end markets as the COVID-19 vaccine programmes across the world
were rolled out and the hospitality sector reopened, there is cause
of optimism. The ultimate lasting impact of the pandemic on the
economy, Benchmark's markets and its businesses remains to some
extent uncertain, and the Directors recognise that full recovery
could take time and remain cautious of the possibility of a return
of restrictions. Available market analysis continues to be
monitored to ensure appropriate mitigating actions can be taken as
necessary.
The Directors have prepared cash flow projections covering the
period to September 2023 to assess the Group's trading and cash
flow forecasts as well as compliance with the covenants included
within the Group's financing arrangements.
Cash resources, whilst reduced, are still strong after
investment in growth opportunities during the year.
The RCF and Bond facilities both expire within the next 24
months, the RCF in Dec 2022 and the NOK Bond in June 2023, the
Board does not believe that renewing or refinancing these
facilities would not be achievable given our good trading record
since the restructuring and the positive momentum in the business.
In the downside scenario analysis performed, the Directors have
considered the severe but plausible impacts of market downturns on
the Group's trading and cash flow forecasts, modelling reductions
in the revenues and cash flows in Advanced Nutrition and Genetics,
alongside modelling delays to uptake of the sale of Ectosan(R) Vet
and CleanTreat(R) in the Health business area.
It is difficult to predict the overall outcome and impact of the
pandemic, however, under the severe but plausible downside
scenarios modelled, the Group has sufficient liquidity and
resources throughout the period under review whilst still
maintaining adequate headroom against the borrowing covenants.
However, it should be noted that the Group's main borrowing
facilities are set to expire within the next 19 months - the $15m
RCF is set to expire in December 2022, and the NOK 850m bond is due
to expire in June 2023. The cashflow forecasts reviewed rely on
these borrowing facilities being in place. As noted above, the
Directors have commenced a review of the capital structure,
including certain short term actions and also longer term financing
options, and are confident that these facilities can be renewed or
replaced before they expire, with trading going well despite the
headwinds of the pandemic and relationships with finance providers
strong. Cash resources continue to remain strong with the group
managing discretionary spend closely as recovery from the pandemic
progresses.
Based on their assessment, the Directors believe it remains
appropriate to prepare the financial statements on a going concern
basis. However, while the Directors remain confident that the
current facilities will be renewed or replaced in the next 19
months, the requirement to do so represents a material uncertainty
that may cast significant doubt on the Group's and Company's
ability to continue as a going concern and therefore to continue
realising their assets and discharging their liabilities in the
normal course of business. The financial statements do not include
any adjustments that would result from the basis of preparation
being inappropriate.
Accordingly, the financial statements have been prepared on a
going concern basis.
Consolidated Income Statement
for the year ended 30 September 2021
2021 2020
Notes GBP000 GBP000
====================================================== ===== ======== ========
Continuing operations
Revenue 125,062 105,565
Cost of sales (59,477) (50,603)
====================================================== ===== ======== ========
Gross profit 65,585 54,962
Research and development costs (7,010) (7,282)
Other operating costs (38,221) (33,337)
Share of (loss)/profit of equity-accounted investees,
net of tax (905) 150
====================================================== ===== ======== ========
Adjusted EBITDA(2) 19,449 14,493
Exceptional - restructuring/acquisition-related items 4 (184) (2,114)
====================================================== ===== ======== ========
EBITDA(1) 19,265 12,379
Depreciation and impairment (8,359) (6,640)
Amortisation and impairment (16,283) (16,613)
====================================================== ===== ======== ========
Operating loss (5,377) (10,874)
Finance cost 3 (7,987) (12,779)
Finance income 3 4,185 1,082
====================================================== ===== ======== ========
Loss before taxation (9,179) (22,571)
Tax on loss (2,397) (204)
====================================================== ===== ======== ========
Loss from continuing operations (11,576) (22,775)
====================================================== ===== ======== ========
Discontinued operations
Loss from discontinued operations, net of tax - (9,174)
====================================================== ===== ======== ========
(11,576) (31,949)
====================================================== ===== ======== ========
(Loss)/profit for the year attributable to:
- Owners of the parent (12,891) (32,923)
- Non-controlling interest 1,315 974
====================================================== ===== ======== ========
(11,576) (31,949)
------------------------------------------------------ ----- -------- --------
Earnings per share
Basic loss per share (pence) 5 (1.93) (5.26)
Diluted loss per share (pence) 5 (1.93) (5.26)
Earnings per share - continuing operations
Basic loss per share (pence) 5 (1.93) (3.80)
Diluted loss per share (pence) 5 (1.93) (3.80)
------------------------------------------------------ ----- -------- --------
GBP000 GBP000
====================================================== ===== ======== ========
Adjusted EBITDA from continuing operations 19,449 14,493
Adjusted EBITDA from discontinued operations - (8,726)
====================================================== ===== ======== ========
Total Adjusted EBITDA 19,449 5,767
------------------------------------------------------ ----- -------- --------
1 EBITDA - earnings before interest, tax, depreciation, amortisation and impairment.
2 Adjusted EBITDA - EBITDA before exceptional and acquisition-related items.
Consolidated Statement of Comprehensive Income
for the year ended 30 September 2021
2021 2020
GBP000 GBP000
========================================================= ======== ========
Loss for the year (11,576) (31,949)
Other comprehensive income
Items that are or may be reclassified subsequently to
profit or loss
Foreign exchange translation differences (9,929) (20,327)
Cash flow hedges - changes in fair value 3,054 (5,932)
Cash flow hedges - reclassified to profit or loss 709 (153)
========================================================= ======== ========
Total comprehensive income for the year (17,742) (58,361)
========================================================= ======== ========
Total comprehensive income for the year attributable to:
- Owners of the parent (19,329) (58,532)
- Non-controlling interest 1,587 171
========================================================= ======== ========
(17,742) (58,361)
========================================================= ======== ========
Total comprehensive income for the year attributable to:
- Continuing operations (19,329) (50,604)
- Discontinued operations* - (7,928)
========================================================= ======== ========
(19,329) (58,532)
========================================================= ======== ========
* For 2020 total comprehensive income for the year relating to
discontinued operations includes the loss of GBP9,174,000 and
foreign exchange gains of GBP1,246,000.
Consolidated Balance Sheet
as at 30 September 2021
2021 2020
Notes GBP000 GBP000
=================================================== ===== ========= =========
Assets
Property, plant and equipment 6 78,780 65,601
Right-of-use assets 7 25,531 10,347
Intangible assets 8 229,040 247,003
Equity-accounted investees 3,354 3,690
Other investments 15 23
Biological and agricultural assets 10 21,244 16,621
=================================================== ===== ========= =========
Non-current assets 357,964 343,285
=================================================== ===== ========= =========
Inventories 20,947 18,926
Biological and agricultural assets 10 17,121 15,848
Trade and other receivables 11 46,498 39,371
Cash and cash equivalents 39,460 71,605
=================================================== ===== ========= =========
Current assets 124,026 145,750
=================================================== ===== ========= =========
Total assets 481,990 489,035
=================================================== ===== ========= =========
Liabilities
Trade and other payables 12 (46,668) (45,692)
Loans and borrowings 13 (10,654) (5,339)
Corporation tax liability (5,634) (4,344)
Provisions (563) -
=================================================== ===== ========= =========
Current liabilities (63,519) (55,375)
=================================================== ===== ========= =========
Loans and borrowings 13 (109,737) (103,819)
Other payables 12 (911) (1,754)
Deferred tax (28,224) (32,647)
=================================================== ===== ========= =========
Non-current liabilities (138,872) (138,220)
=================================================== ===== ========= =========
Total liabilities (202,391) (193,595)
=================================================== ===== ========= =========
Net assets 279,599 295,440
=================================================== ===== ========= =========
Issued capital and reserves attributable to owners
of the parent
Share capital 670 668
Additional paid-in capital 400,682 399,601
Capital redemption reserve 5 5
Retained earnings (154,231) (142,170)
Hedging reserve (5,876) (9,651)
Foreign exchange reserve 30,465 40,678
=================================================== ===== ========= =========
Equity attributable to owners of the parent 271,715 289,131
Non-controlling interest 7,884 6,309
=================================================== ===== ========= =========
Total equity and reserves 279,599 295,440
=================================================== ===== ========= =========
Consolidated Statement of Changes in Equity
for the year ended 30 September 2021
Total
attributable
Additional to equity
Share paid-in Other Hedging Retained holders of Non-controlling Total
capital share capital* reserves reserve earnings parent interest equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
=============== ======== =============== ========= ======== ========= =============== =============== ========
As at 1 October
2019 559 358,044 60,207 (3,566) (110,916) 304,328 6,138 310,466
=============== ======== =============== ========= ======== ========= =============== =============== ========
Comprehensive
income
for the year
(Loss)/profit
for the
year - - - - (32,923) (32,923) 974 (31,949)
Other
comprehensive
income - - (19,524) (6,085) - (25,609) (803) (26,412)
=============== ======== =============== ========= ======== ========= =============== =============== ========
Total
comprehensive
income
for the year - - (19,524) (6,085) (32,923) (58,532) 171 (58,361)
=============== ======== =============== ========= ======== ========= =============== =============== ========
Contributions
by and
distributions
to owners
Share issue 109 42,869 - - - 42,978 - 42,978
Share issue
costs
recognised
through equity - (1,312) - - - (1,312) - (1,312)
Share-based
payment - - - - 1,669 1,669 - 1,669
=============== ======== =============== ========= ======== ========= =============== =============== ========
Total
contributions
by and
distributions
to owners 109 41,557 - - 1,669 43,335 - 43,335
=============== ======== =============== ========= ======== ========= =============== =============== ========
Total
transactions
with
owners of the
Company 109 41,557 - - 1,669 43,335 - 43,335
=============== ======== =============== ========= ======== ========= =============== =============== ========
As at 30
September 2020 668 399,601 40,683 (9,651) (142,170) 289,131 6,309 295,440
=============== ======== =============== ========= ======== ========= =============== =============== ========
Comprehensive
income
for the year
(Loss)/profit
for the
period - - - - (12,891) (12,891) 1,315 (11,576)
Other
comprehensive
income - - (10,213) 3,775 - (6,438) 272 (6,166)
=============== ======== =============== ========= ======== ========= =============== =============== ========
Total
comprehensive
income for the
year - - (10,213) 3,775 (12,891) (19,329) 1,587 (17,742)
=============== ======== =============== ========= ======== ========= =============== =============== ========
Contributions
by and
distributions
to owners
Share issue 2 1,081 - - - 1,083 - 1,083
Share-based
payment - - - - 830 830 - 830
=============== ======== =============== ========= ======== ========= =============== =============== ========
Total
contributions
by and
distributions
to owners 2 1,081 - - 830 1,913 - 1,913
=============== ======== =============== ========= ======== ========= =============== =============== ========
Changes in
ownership
Acquisition of
NCI - - - - - - (12) (12)
=============== ======== =============== ========= ======== ========= =============== =============== ========
Total changes
in ownership
interests - - - - - - (12) (12)
=============== ======== =============== ========= ======== ========= =============== =============== ========
Total
transactions
with
owners of the
Company 2 1,081 - - 830 1,913 (12) 1,901
=============== ======== =============== ========= ======== ========= =============== =============== ========
As at 30
September 2021 670 400,682 30,470 (5,876) (154,231) 271,715 7,884 279,599
=============== ======== =============== ========= ======== ========= =============== =============== ========
Consolidated Statement of Cash Flows
for the year ended 30 September 2021
2021 2020
Notes GBP000 GBP000
========================================================= ===== ======== ========
Cash flows from operating activities
Loss for the year (11,576) (31,949)
Adjustments for:
Depreciation and impairment of property, plant and
equipment 5,017 6,995
Depreciation and impairment of right-of-use assets 3,342 2,143
Amortisation and impairment of intangible fixed assets 16,283 19,402
Loss on sale of property, plant and equipment 46 (1,140)
Gain on sale of subsidiaries - (14,120)
Finance income (1,442) (111)
Finance costs 3 7,987 9,695
Other adjustments for non-cash items - 200
Share of (loss)/profit of equity-accounted investees,
net of tax 905 (150)
Foreign exchange gains (1,800) (132)
Share-based payment expense 830 1,669
Tax expense 2,397 314
========================================================= ===== ======== ========
21,989 (7,184)
(Increase)/decrease in trade and other receivables (8,178) 4,202
(Increase)/decrease in inventories (3,554) 3,741
Increase in biological and agricultural assets (5,427) (7,474)
Increase in trade and other payables 5,547 5,006
Decrease in provisions - (260)
========================================================= ===== ======== ========
10,377 (1,969)
Income taxes paid (4,587) (2,087)
========================================================= ===== ======== ========
Net cash flows generated from/(used in) operating
activities 5,790 (4,056)
========================================================= ===== ======== ========
Investing activities
Proceeds from sale of subsidiaries, net of cash disposed
of - 17,487
Purchases of investments (578) (522)
Receipts from disposal of investments 9 6,932
Purchases of property, plant and equipment (17,683) (5,851)
Proceeds from sales of intangible assets - 261
Purchases of intangibles (5,038) (5,563)
Purchases of held for sale assets - (402)
Proceeds from sale of fixed assets 112 16,147
Proceeds from sales of other long-term assets - 1,776
Interest received 88 111
========================================================= ===== ======== ========
Net cash flows (used in)/generated from investing
activities (23,090) 30,376
========================================================= ===== ======== ========
Financing activities
Proceeds of share issues 750 42,978
Share-issue costs recognised through equity - (1,312)
Acquisition of NCI (12) -
Proceeds from bank or other borrowings - 8,387
Repayment of bank or other borrowings (3,106) (10,141)
Interest and finance charges paid (7,699) (7,659)
Repayments of lease liabilities (4,602) (2,120)
========================================================= ===== ======== ========
Net cash flows (used in)/generated from financing
activities (14,669) 30,133
========================================================= ===== ======== ========
Net (decrease)/increase in cash and cash equivalents (31,969) 56,453
Cash and cash equivalents at beginning of year 71,605 16,051
Effect of movements in exchange rate (176) (899)
========================================================= ===== ======== ========
Cash and cash equivalents at end of year 39,460 71,605
========================================================= ===== ======== ========
The accompanying notes form part of the financial statements
1. Basis of preparation
These audited results have been prepared on the basis of the
accounting policies which are to be set out in Benchmark Holdings
Plc's annual report and financial statements for the year ended 30
September 2021. Those policies have been consistently applied to
all the years presented unless otherwise stated.
These Group and parent company financial statements were
prepared in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006
("Adopted IFRS"). While the financial information included in this
preliminary statement has been prepared on the basis of the
requirements of IFRSs in issue, this statement does not itself
contain sufficient information to comply with IFRS.
The financial information set out above does not constitute the
company's statutory accounts for the years ended 30 September 2021
or 2020 but is derived from those accounts. Statutory accounts for
2020 have been delivered to the registrar of companies, and those
for 2021 will be delivered in due course. The auditor has reported
on those accounts. The auditor's report for 2021 was (i)
unqualified, (ii) contained a material uncertainty in respect of
going concern to which the auditor drew attention by way of
emphasis without modifying their report and (iii) did not contain a
statement under section 498(2) or (3) of the Companies Act
2006.Their report for the accounts of 2020 was (i) unqualified and
(ii) did not contain a statement under section 498(2) or (3) of the
Companies Act 2006.
Going concern
As at 30 September 2021 the Group had net assets of GBP279.6m
(2020: GBP295.4m), including cash of GBP39.5m (2020: GBP71.6m) as
set out in the Consolidated Balance Sheet. The Group made a loss
for the year of GBP11.6m (2020: GBP31.9m). As at 30 September 2021
the Company had net assets of GBP336.2m (2020: GBP334.9m),
including cash of GBP9.0m (2020: GBP47.8m). The Company made a loss
for the year of GBP3.9m (2020: GBP7.0m).
As noted earlier in this statement, we have seen some recovery
in our end markets as the COVID-19 vaccine programmes across the
world were rolled out in key markets and the hospitality sector
reopened. The ultimate lasting impact of the pandemic on industry,
the economy, Benchmark's markets and its businesses remains to some
extent uncertain, but strong performance in the year has been
positive and has given cause for optimism. The Directors recognise
that full recovery could take time and remain cautious of the
possibility of a return of restrictions while a return following
the pandemic is managed across the globe. Available market analysis
continues to be monitored to ensure appropriate mitigating actions
can be taken as necessary.
The uncertainty relating to any lasting impact on the Group of
the pandemic continues to be considered as part of the Directors'
assessment of the going concern assumption, and positive
preventative measures implemented by the Directors at an early
stage in response to the pandemic continue to be in force where
necessary. The Directors have reviewed forecasts and cash flow
projections covering the period to September 2023 including
downside sensitivity assumptions in relation to trading performance
across the Group to assess the impact on the Group's trading and
cash flow forecasts and on the forecast compliance with the
covenants included within the Group's financing arrangements. In
the downside scenario analysis performed, the Directors considered
severe but plausible impacts of COVID-19 on the Group's trading and
cash flow forecasts, modelling reductions in the revenues and cash
flows in Advanced Nutrition, being the segment most impacted by
COVID-19 because of its exposure to global shrimp markets,
alongside modelling slower ramp up of the commercialisation of
Benchmark's new sea lice treatment in the Health business area.
Other key downside sensitivities modelled included assumptions on
slower than expected recovery in global shrimp markets (affecting
demand for Advanced Nutrition products), and slower
commercialisation of SPR shrimp. The Directors have observed
recovery in the shrimp markets in the strong performance of the
Advanced Nutrition business during the year. Nevertheless,
mitigating measures within the control of management were
implemented early in the pandemic and a number of these remain in
place and have been factored into the downside analysis performed.
These measures include reductions in areas of discretionary spend,
deferral of capital projects and temporary hold on R&D for
non-imminent products.
It is difficult to predict the overall outcome and impact of the
pandemic, but under all of the above scenario analysis, the Group
has sufficient liquidity and resources throughout the period under
review whilst still maintaining adequate headroom against the
borrowing covenants. However, it should be noted that the Group's
main borrowing facilities are set to expire within the next 19
months - the $15m RCF is set to expire in December 2022, and the
NOK 850m bond is due to expire in June 2023. The cash flow
forecasts reviewed rely on these borrowing facilities being in
place. The Directors have commenced a review of the capital
structure including certain short term actions and also longer term
financing options, and are confident that these facilities can be
renewed or replaced before they expire, with trading going well
despite the headwinds of the pandemic and relationships with
finance providers strong. Cash resources continue to remain strong
with the Group managing discretionary spend closely as recovery
from the pandemic progresses.
Based on their assessment, the Directors believe it remains
appropriate to prepare the financial statements on a going concern
basis. However, while the Directors remain confident that the
current facilities will be renewed or replaced in the next 19
months, the requirement to do this represents a material
uncertainty that may cast significant doubt on the Group's and
Company's ability to continue as a going concern and therefore to
continue realising their assets and discharging their liabilities
in the normal course of business. The financial statements do not
include any adjustments that would result from the basis of
preparation being inappropriate.
2. Segment information
Operating segments are reported in a manner consistent with the
reports made to the chief operating decision maker. It is
considered that the role of chief operating decision maker is
performed by the Board of Directors.
The Group operates globally and for management purposes is
organised into reportable segments based on the following business
areas:
-- Genetics - 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 Nutrition - manufactures and provides technically
advanced nutrition and health products to the global aquaculture
industry.
-- Health - following the divestment programme completed in the
previous year the segment now focuses on providing health products
to the global aquaculture market.
In addition to the above, reported as 'all other segments' is
the Knowledge Services business area, the operations of which were
disposed of or discontinued in the previous two years.
In order to reconcile the segmental analysis to the Consolidated
Income Statement, corporate and inter-segment sales are also shown.
Corporate sales represent revenues earned from recharging certain
central costs to the operating business areas, together with
unallocated central costs.
Measurement of operating segment profit or loss
Inter-segment sales are priced along the same lines as sales to
external customers, with an appropriate discount being applied to
encourage use of Group resources at a rate acceptable to local tax
authorities. This policy was applied consistently throughout the
current and prior period.
All
Advanced other Inter-segment
Year ended 30 September Genetics Nutrition Health segments Corporate sales Total
2021 Notes GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
================================== ======= ======== ========= ======= ======== ========= ============= ========
Revenue 46,797 70,530 7,832 - 4,820 (4,917) 125,062
Cost of sales (20,866) (34,562) (4,118) - 2 67 (59,477)
=========================================== ======== ========= ======= ======== ========= ============= ========
Gross profit/(loss) 25,931 35,968 3,714 - 4,822 (4,850) 65,585
Research and development
costs (4,865) (1,948) (197) - - - (7,010)
Other operating costs (8,933) (19,918) (6,202) - (8,018) 4,850 (38,221)
Share of loss of equity-accounted
investees, net of tax (605) (300) - - - - (905)
=========================================== ======== ========= ======= ======== ========= ============= ========
Adjusted EBITDA 11,528 13,802 (2,685) - (3,196) - 19,449
Exceptional -
restructuring/acquisition-related
items 850 (356) (515) - (163) - (184)
=========================================== ======== ========= ======= ======== ========= ============= ========
EBITDA 12,378 13,446 (3,200) - (3,359) - 19,265
Depreciation and impairment (4,166) (2,154) (1,871) - (168) - (8,359)
Amortisation and impairment (1,338) (13,896) (1,047) - (2) - (16,283)
=========================================== ======== ========= ======= ======== ========= ============= ========
Operating profit/(loss) 6,874 (2,604) (6,118) - (3,529) - (5,377)
Finance cost (7,987)
Finance income 4,185
=========================================== ======== ========= ======= ======== ========= ============= ========
Loss before tax (9,179)
=========================================== ======== ========= ======= ======== ========= ============= ========
All
Advanced other Inter-segment
Year ended 30 September Genetics Nutrition Health segments Corporate sales Total
2020 Notes GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
================================== ======= ======== ========= ======== ======== ========= ============= ========
Revenue 41,504 59,362 10,799 9,257 4,939 (5,469) 120,392
Cost of sales (14,886) (32,162) (12,437) (4,476) (139) 497 (63,603)
=========================================== ======== ========= ======== ======== ========= ============= ========
Gross profit/(loss) 26,618 27,200 (1,638) 4,781 4,800 (4,972) 56,789
Research and development
costs (3,827) (1,525) (4,655) - - - (10,007)
Other operating costs (8,499) (19,409) (6,593) (4,537) (7,099) 4,972 (41,165)
Share of profit of equity-accounted
investees, net of tax 150 - - - - - 150
=========================================== ======== ========= ======== ======== ========= ============= ========
Adjusted EBITDA 14,442 6,266 (12,886) 244 (2,299) - 5,767
Exceptional -
restructuring/acquisition-related
items - (727) 764 4,448 (1,513) - 2,972
=========================================== ======== ========= ======== ======== ========= ============= ========
EBITDA 14,442 5,539 (12,122) 4,692 (3,812) - 8,739
Depreciation and impairment (3,341) (2,080) (2,747) (711) (259) - (9,138)
Amortisation and impairment (1,494) (14,800) (2,728) (380) - - (19,402)
=========================================== ======== ========= ======== ======== ========= ============= ========
Operating profit/(loss) 9,607 (11,341) (17,597) 3,601 (4,071) - (19,801)
Finance cost (11,945)
Finance income 111
=========================================== ======== ========= ======== ======== ========= ============= ========
Loss before tax (31,635)
=========================================== ======== ========= ======== ======== ========= ============= ========
Reconciliation of segmental information to IFRS measures -
revenue and loss before tax
Revenue
2021 2020
GBP000 GBP000
=========================================== ======= ========
Total revenue per segmental information 125,062 120,392
Less: revenue from discontinued operations - (14,827)
=========================================== ======= ========
Consolidated revenue 125,062 105,565
=========================================== ======= ========
Loss before tax
2021 2020
GBP000 GBP000
=================================================== ======= ========
Loss before tax per segmental information (9,179) (31,635)
Less: loss before tax from discontinued operations - 9,064
=================================================== ======= ========
Consolidated loss before tax (9,179) (22,571)
=================================================== ======= ========
Non-current assets by location of assets
2021 2020
GBP000 GBP000
=============== ======= =======
Belgium 156,998 178,222
Norway 86,545 72,012
UK 44,629 25,278
Iceland 35,062 39,892
Rest of Europe 1,062 1,406
Rest of world 33,668 26,475
=============== ======= =======
357,964 343,285
=============== ======= =======
3. Net finance costs
Continuing operations
2021 2020
GBP000 GBP000
========================================================== ======= ========
Interest received on bank deposits 88 98
Foreign exchange gains on financing activities 786 971
Foreign exchange gains on operating activities 1,957 -
Cash flow hedges - reclassified from OCI (709) -
Cash flow hedges - fair value gain on non-hedge accounted
CCS 2,063 -
Dividend income - 13
========================================================== ======= ========
Finance income 4,185 1,082
========================================================== ======= ========
Leases (interest portion) (1,076) (503)
Foreign exchange losses on operating activities - (3,221)
Cash flow hedges - reclassified from OCI - 153
Cash flow hedges - fair value loss on non-hedge accounted
CCS - (1,338)
Interest expense on financial liabilities measured at
amortised cost (6,911) (7,870)
========================================================== ======= ========
Finance cost (7,987) (12,779)
========================================================== ======= ========
Net finance costs recognised in profit or loss (3,802) (11,697)
========================================================== ======= ========
4. Exceptional items - restructuring/acquisition-related
items
Items that are material because of their nature, non-recurring
or 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.
2021 2020
GBP000 GBP000
================================ ======= =======
Acquisition-related items (850) 586
Exceptional restructuring costs 480 1,528
Cost in relation to disposals 554 -
================================ ======= =======
Total exceptional items 184 2,114
================================ ======= =======
Acquisition-related items are costs incurred in investigating
and acquiring new businesses. During the year contingent
consideration of GBP850,000 was released in relation to the
purchase of Benchmark Genetics (USA) Inc. In 2020, GBP233,000 was
expensed in relation to a loan provided to a potential acquisition
target and which has now been provided for, and GBP353,000 for
professional fees in relation to investigating the potential of a
partnership in the Health business area which was not pursued.
Exceptional expenses include: GBP480,000 of staff costs (2020:
GBP1,244,000) relating to the Board's decision to make significant
changes to the Group's management team and bring in new management,
GBPnil of legal fees (2020: GBP52,000) and GBPnil (2020:
GBP232,000) of other restructuring items.
Costs in relation to disposals include: GBP346,000 of legal
fees, GBP114,000 of staff costs, GBP85,000 of lease costs, and
GBP9,000 of other disposal items. These relate to additional costs
relating to disposals that occurred in the prior year.
5. Loss per share
Basic 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.
2021 2020
================================ ================================== ==================================
Continuing Discontinued Total Continuing Discontinued Total
================================ ========== ============ ======== ========== ============ ========
Loss attributable to equity
holders of the Parent (GBP000) (12,891) - (12,891) (23,749) (9,174) (32,923)
Weighted average number
of shares in issue (thousands) 669,459 625,466
Basic loss per share (pence) (1.93) - (1.93) (3.80) (1.46) (5.26)
-------------------------------- ---------- ------------ -------- ---------- ------------ --------
Diluted 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 based on the monetary value of the subscription rights
attached to outstanding share options and warrants.
Therefore, the Company is required to adjust the loss per share
calculation in relation to the share options that are in issue
under the Company's share-based incentive schemes as follows:
2021 2020
================================ ================================== ==================================
Continuing Discontinued Total Continuing Discontinued Total
================================ ========== ============ ======== ========== ============ ========
Loss attributable to equity
holders of the Parent (GBP000) (12,891) - (12,891) (23,749) (9,174) (32,923)
Weighted average number
of shares in issue (thousands) 669,459 625,466
Diluted loss per share (pence) (1.93) - (1.93) (3.80) (1.46) (5.26)
-------------------------------- ---------- ------------ -------- ---------- ------------ --------
A total of 4,615,712 potential ordinary shares have not been
included within the calculation of statutory diluted loss per share
for the year (2020: 1,426,663) as they are anti-dilutive. However,
these potential ordinary shares could dilute earnings/loss per
share in the future.
6. Property, plant and equipment
Group
Long-Term
Freehold Assets in Leasehold Office
Land and the course Property Plant Equipment
Buildings of construction Improvements and Machinery and Fixtures Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
================================ ========== ================ ============= ============== ============= ========
Cost
Balance at 1 October 2019 75,373 1,304 6,466 31,412 2,610 117,165
Reclassified as Right-of-use
assets - - - (292) - (292)
Additions 1,593 715 352 2,799 393 5,852
Reclassification 500 (177) (500) 177 - -
Increase/(decrease) through
transfers
from assets in the course of
construction 366 (489) - 46 77 -
Exchange differences (5,924) (110) (191) (1,986) (298) (8,509)
Reclassification from assets
held
for resale - - - 2,504 - 2,504
Disposals (14,052) (30) (160) (8,600) (184) (23,026)
Disposals through sale of
subsidiary - - - (911) (2) (913)
================================ ========== ================ ============= ============== ============= ========
Balance at 30 September 2020 57,856 1,213 5,967 25,149 2,596 92,781
================================ ========== ================ ============= ============== ============= ========
Balance at 1 October 2020 57,856 1,213 5,967 25,149 2,596 92,781
Additions 4,461 4,118 841 7,608 955 17,983
Reclassification (2,075) (371) 38 2,414 (6) -
Increase/(decrease) through
transfers
from assets in the course of
construction 3,080 (3,080) - - - -
Exchange differences (5) (73) (22) (1,107) (206) (1,413)
Disposals (290) - (403) (1,171) (588) (2,452)
================================ ========== ================ ============= ============== ============= ========
Balance at 30 September 2021 63,027 1,807 6,421 32,893 2,751 106,899
================================ ========== ================ ============= ============== ============= ========
Accumulated depreciation
Balance at 1 October 2019 6,043 295 4,985 16,014 928 28,265
Reclassified as Right-of-use
assets - - - (14) - (14)
Depreciation charge for the year 2,208 - 222 2,605 454 5,489
Impairment charge for the year 542 - 99 112 - 753
Reclassification 92 (177) (92) 177 - -
Reclassification from assets
held
for resale - - - 2,504 - 2,504
Exchange differences (979) (88) (129) (1,163) (179) (2,538)
Disposals (1,425) (30) (101) (4,655) (155) (6,366)
Disposals through sale of
subsidiary - - - (911) (2) (913)
================================ ========== ================ ============= ============== ============= ========
Balance at 30 September 2020 6,481 - 4,984 14,669 1,046 27,180
================================ ========== ================ ============= ============== ============= ========
Balance at 1 October 2020 6,481 - 4,984 14,669 1,046 27,180
Depreciation charge for the year 2,120 - 192 2,379 486 5,177
Reversal of impairment in the
year - - - (160) - (160)
Exchange differences (541) - (63) (986) (196) (1,786)
Disposals (231) - (390) (1,096) (575) (2,292)
================================ ========== ================ ============= ============== ============= ========
Balance at 30 September 2021 7,829 - 4,723 14,806 761 28,119
================================ ========== ================ ============= ============== ============= ========
Net book value
================================ ========== ================ ============= ============== ============= ========
At 30 September 2021 55,198 1,807 1,698 18,087 1,990 78,780
================================ ========== ================ ============= ============== ============= ========
At 30 September 2020 51,375 1,213 983 10,480 1,550 65,601
================================ ========== ================ ============= ============== ============= ========
At 1 October 2019 69,330 1,009 1,481 15,398 1,682 88,900
================================ ========== ================ ============= ============== ============= ========
7. Leases
Group
2021 2020
Right-of-use assets GBP000 GBP000
============================== ======= =======
Leasehold property 9,859 7,698
Plant and machinery 15,541 2,437
Office equipment and fixtures 131 212
============================== ======= =======
25,531 10,347
============================== ======= =======
2021 2020
Lease liabilities GBP000 GBP000
============================== ======= =======
Current 9,042 2,483
Non-current 14,945 7,956
============================== ======= =======
23,987 10,439
============================== ======= =======
2021 2020
Depreciation charge of right-of-use assets GBP000 GBP000
==================================================== ======= =======
Leasehold property 1,449 850
Plant and machinery 1,718 612
Office equipment and fixtures 75 83
==================================================== ======= =======
3,242 1,545
==================================================== ======= =======
2021 2020
Additional information GBP000 GBP000
==================================================== ======= =======
Additions to right-of-use assets 18,721 7,963
Impairment of leasehold property right-of-use asset 100 273
Lease interest (expense and amount paid) 1,076 571
Expense relating to short-term leases 371 981
Expense relating to leases of low-value leases 58 27
Total cash outflow for leases 6,107 3,372
---------------------------------------------------- ------- -------
8. Intangible assets
Group
Patents
and Intellectual Customer Development
Websites Goodwill Trademarks Property Lists Contracts Licences Genetics costs Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
================== ======== ======== ========== ============ ======== ========= ======== ======== =========== ========
Cost or valuation
Balance at 1
October
2019 112 153,389 442 146,804 5,772 6,815 37,077 24,859 18,706 393,976
Additions -
externally
acquired 112 - 141 728 - - - - - 981
Additions -
internally
developed - - - - - - - - 4,583 4,583
Increase/decrease
through transfers - - (292) 107 - - 185 - - -
Disposals through
sale of
subsidiary - - (2) (2,209) - - - - - (2,211)
Disposals - - (18) - - - - - (55) (73)
Exchange
differences (23) (9,043) (1) (6,712) (275) (254) (1,703) (2,677) (177) (20,865)
================== ======== ======== ========== ============ ======== ========= ======== ======== =========== ========
Balance at 30
September 2020 201 144,346 270 138,718 5,497 6,561 35,559 22,182 23,057 376,391
================== ======== ======== ========== ============ ======== ========= ======== ======== =========== ========
Balance at 1
October
2020 201 144,346 270 138,718 5,497 6,561 35,559 22,182 23,057 376,391
Additions -
externally
acquired 115 - 68 - - - 42 - - 225
Additions -
internally
developed - - - - - - - - 4,813 4,813
Exchange
differences 3 (4,291) - (5,517) (226) 41 (1,122) 454 (291) (10,949)
================== ======== ======== ========== ============ ======== ========= ======== ======== =========== ========
Balance at 30
September 2021 319 140,055 338 133,201 5,271 6,602 34,479 22,636 27,579 370,480
================== ======== ======== ========== ============ ======== ========= ======== ======== =========== ========
Accumulated
amortisation
and impairment
Balance at 1
October
2019 8 44,807 92 54,580 834 5,835 8,923 3,153 - 118,232
Amortisation
charge
for the period 20 - 49 13,308 212 462 2,209 631 - 16,891
Impairment - 432 19 - - - 591 - 1,091 2,133
Disposals - - (18) - - - - - - (18)
Increase/decrease
through transfers - - (58) - - - 58 - - -
Disposals through
sale of
subsidiary - - (2) (2,209) - - - - - (2,211)
Exchange
differences (2) (2,138) (1) (2,516) (41) (183) (405) (353) - (5,639)
================== ======== ======== ========== ============ ======== ========= ======== ======== =========== ========
Balance at 30
September 2020 26 43,101 81 63,163 1,005 6,114 11,376 3,431 1,091 129,388
================== ======== ======== ========== ============ ======== ========= ======== ======== =========== ========
Balance at 1 October
2020 26 43,101 81 63,163 1,005 6,114 11,376 3,431 1,091 129,388
Amortisation charge
for the period 41 - 53 12,707 199 66 1,909 622 299 15,896
Impairment - - - - - - - - 387 387
Exchange differences - (1,743) (1) (2,329) (38) 30 (208) 58 - (4,231)
===================== === ======= === ======= ===== ===== ====== ====== ====== =======
Balance at 30
September 2021 67 41,358 133 73,541 1,166 6,210 13,077 4,111 1,777 141,440
===================== === ======= === ======= ===== ===== ====== ====== ====== =======
Net book value
At 30 September
2021 252 98,697 205 59,660 4,105 392 21,402 18,525 25,802 229,040
===================== === ======= === ======= ===== ===== ====== ====== ====== =======
At 30 September
2020 175 101,245 189 75,555 4,492 447 24,183 18,751 21,966 247,003
===================== === ======= === ======= ===== ===== ====== ====== ====== =======
At 1 October 2019 104 108,582 350 92,224 4,938 980 28,154 21,706 18,706 275,744
===================== === ======= === ======= ===== ===== ====== ====== ====== =======
In FY20, the sale of the assets of the Group's vaccines
manufacturing facility resulted in an impairment of goodwill of
GBP432,000 and licences of GBP591,000. The decision to discontinue
vaccine development programmes resulted in an impairment of
development costs of GBP1,091,000 and patents and trademarks of
GBP19,000.
The table below provides further detail of intangibles and their
remaining amortisation period.
Net book Net book Remaining
value value life
Description Category 2021 2020 2021
============================================= =============== ======== ======== ===========
Acquisition of INVE in 2015
Goodwill Goodwill 72,385 75,466 -
Licences Licences 19,599 21,523 14
Intellectual
Product technology property 1,843 3,459 1
Intellectual
Product rights property 42,571 54,827 4
Intellectual
Brand names property 11,533 12,868 14
Intellectual
In-process R&D property 915 1,179 4
Customer relationships Customer lists 4,105 4,492 20
============================================= =============== ======== ======== ===========
Total relating to acquisition of INVE 152,951 173,814
============================================================== ======== ======== ===========
Acquisition of Salmobreed AS (Now part
of Benchmark Genetics Norway AS) in
2014
Goodwill Goodwill 6,703 6,523 -
Genetic material and breeding nuclei Genetics 10,500 10,526 33
============================================= =============== ======== ======== ===========
Total relating to acquisition of Salmobreed
AS 17,203 17,049
============================================================== ======== ======== ===========
Acquisition of Stofnfiskur (now Benchmark
Genetics Iceland) in 2014
--------------------------------------------- --------------- -------- -------- -----------
Goodwill Goodwill 11,394 11,216 -
--------------------------------------------- --------------- -------- -------- -----------
Genetic material and breeding nuclei Genetics 7,677 7,784 33
============================================= =============== ======== ======== ===========
Total relating to acquisition of Stofnfiskur 19,071 19,000
============================================================== ======== ======== ===========
Acquisition of Akvaforsk Genetics Center
AS (Now part of Benchmark Genetics Norway
AS) in 2015
Goodwill Goodwill 7,552 7,348 -
Licences Licences 662 994 2
Contracts Contracts 392 447 4
============================================= =============== ======== ======== ===========
Total relating to acquisition of Akvaforsk
Genetics Center AS 8,606 8,789
============================================================== ======== ======== ===========
Capitalised development costs
Development
Ectosan(R) Vet/CleanTreat(R) costs 17,621 15,267 10
Not yet
Development ready for
Live food alternative diets costs 3,318 3,215 use
Not yet
Development ready for
SPR shrimp costs 4,863 3,033 use
============================================= =============== ======== ======== ===========
Total capitalised development costs 25,802 21,515
============================================================== ======== ======== ===========
Other purchased material intangible Intellectual
assets property 1,586 2,543 18
============================================= =============== ======== ======== ===========
Total relating to other purchased intangible
assets 1,586 2,543
============================================================== ======== ======== ===========
Other individually immaterial goodwill
and intangible assets 3,821 4,293
============================================================== ======== ======== ===========
Total net book value at 30 September 229,040 247,003
============================================================== ======== ======== ===========
9. Impairment testing of goodwill and other intangible
assets
The Group tests goodwill and other intangibles not yet ready for
use annually for impairment, or more frequently if there are
indications that goodwill or the other intangible assets might be
impaired.
Goodwill acquired in a business combination is allocated, at
acquisition, to the CGUs that are expected to benefit from the
business combination. The only intangible assets not yet ready for
use are the capitalised development costs on internally developed
products. Following the commercial launch of the new sea lice
treatment in Health, amortisation of these development costs
commenced during the year. As this amortisation commenced only
recently in August 2021 the decision was taken to include the
associated capitalised development costs in the annual impairment
review. The development costs included in the table below
represents only those that are not yet ready for use.
Goodwill and other intangibles not yet ready for use arise
across the Group, and are allocated specifically against the
following three CGUs:
Advanced
Genetics Nutrition Health Total
2021 2021 2021 2021
GBP000 GBP000 GBP000 GBP000
========================================== ======== ========== ======= =======
Benchmark Genetics Norway AS 6,702 - - 6,702
Benchmark Genetics Iceland HF (Previously
Stofnfiskur HF) 11,394 - - 11,394
Akvaforsk Genetic Center* 8,216 - - 8,216
INVE Aquaculture Group - 72,385 - 72,385
========================================== ======== ========== ======= =======
Goodwill 26,312 72,385 - 98,697
========================================== ======== ========== ======= =======
Other intangibles not yet ready for use
- development costs 4,863 3,318 - 8,181
========================================== ======== ========== ======= =======
* Includes goodwill arising from the joint acquisition of
Akvaforsk Genetics Center AS (which was transferred into Benchmark
Genetics Norway AS) and Benchmark Genetics USA Inc (formerly
Akvaforsk Genetics Center Inc).
Advanced
Genetics Nutrition Health Total
2020 2020 2020 2020
GBP000 GBP000 GBP000 GBP000
========================================== ======== ========== ======= =======
Benchmark Genetics Norway AS 6,523 - - 6,523
Benchmark Genetics Iceland HF (Previously
Stofnfiskur HF) 11,216 - - 11,216
Akvaforsk Genetic Center* 8,040 - - 8,040
INVE Aquaculture Group - 75,466 - 75,466
========================================== ======== ========== ======= =======
Goodwill 25,779 75,466 - 101,245
========================================== ======== ========== ======= =======
Other intangibles not yet ready for use
- development costs 3,032 3,215 15,719 21,966
========================================== ======== ========== ======= =======
* Includes goodwill arising from the joint acquisition of
Akvaforsk Genetics Center AS (which was transferred into Benchmark
Genetics Norway AS) and Benchmark Genetics USA Inc (formerly
Akvaforsk Genetics Center Inc).
The recoverable amounts of the above CGUs have been determined
from value-in-use calculations. These calculations used Board
approved cash flow projections from five-year business plans based
on actual operating results and current forecasts. These forecasts
were then extrapolated into perpetuity taking account of specific
terminal growth rates for future cash flows, using individual
business operating margins based on past experience and future
expectations in light of anticipated economic and market
conditions. The pre-tax cash flows that these projections produced
were discounted at pre-tax discount rates based on the Group's beta
adjusted cost of capital, further adjusted to reflect management's
assessment of specific risks related to the markets and other
factors pertaining to each CGU. Specific assumptions used are as
follows:
Genetics
The pre-tax cash flows from the five-year projections were
discounted using a pre-tax discount rate of 10.9% (2020: 11.6%).
CAGR of revenue of 14% (2020: 13%) is implied by the five-year plan
and a long-term growth rate of 2.5% (2020: 2.5%) has been used to
extrapolate the terminal year cash flow into perpetuity.
Having conducted a sensitivity analysis of key assumptions, no
reasonably possible changes that would result in the elimination of
all headroom were identified. All other assumptions being
unchanged, an increase in the pre-tax discount rate to 14.1% would
reduce the headroom on the Genetics CGU to nil, however, management
do not consider this to be a reasonably possible eventuality.
Advanced Nutrition
The pre-tax cash flows from the five-year projections were
discounted using a pre-tax discount rate of 10.3% (2020: 10.3%).
CAGR of revenue of 6% (2020: 12%) is implied by the five-year plan
and a long-term growth rate of 3.5% (2020: 3.5%) has been used to
extrapolate the terminal year cash flow into perpetuity.
The value-in-use assessment is sensitive to changes in the key
assumptions used. All other assumptions being unchanged a decrease
in the long-term growth rate to 2.1%, or an increase in the pre-tax
discount rate to 11.9%, either of which are considered to be
reasonably possible, would reduce the headroom on the Advanced
Animal Nutrition CGU of GBP47.1m to nil. Should the discount rate
increase further than this, then an impairment of the goodwill or
development costs would be likely.
Health
Amortisation of the development costs relating to the business
area's new sea lice treatment commenced in the period.
The pre-tax cash flows from the five-year projections were
discounted using a pre-tax discount rate of 12.6% (2020: 13.2%). An
assumed CAGR of revenue of 70% (2020: 68%) in the five-year plan
reflects the importance of the successful commercialisation of the
business area's new sea lice treatment in the forecast period. A
long-term growth rate of 0.0% (2020: 2.5%) has been used to
extrapolate the terminal year cash flow into perpetuity. The
prudent assumption in the long-term growth rate is intended to
reflect that the business area's new sea lice treatment is the
principal source of cash generation, and only benefits from patent
protection against generic competitors for a finite period of
time.
While the valuation of the Health cash-generating unit indicates
sufficient headroom such that any reasonably possible change to key
assumptions is unlikely to result in an impairment in related
development costs, commercialisation is at an early stage and in
the unlikely event that this is not successful, impairment could
result.
10. Biological assets
Book value of biological assets recognised at fair value
2021 2020
Group GBP000 GBP000
===================================== ======= =======
Salmon eggs 9,830 9,362
Salmon broodstock 26,700 21,051
Salmon milt 365 359
Lumpfish fingerlings 1,104 1,317
Shrimp 366 380
===================================== ======= =======
Total biological assets 30 September 38,365 32,469
===================================== ======= =======
Analysed as
Current 17,121 15,848
Non-current 21,244 16,621
===================================== ======= =======
Total biological assets 30 September 38,365 32,469
===================================== ======= =======
Change in book value of biological assets
2021 2020
GBP000 GBP000
======================================================= ======== ========
Biological assets 1 October 32,469 28,493
Increase from production 36,872 36,678
Reduction due to sales (34,768) (32,449)
======================================================= ======== ========
Other movements in biological assets 2,104 4,229
Foreign exchange movement before fair value adjustment 311 (2,363)
Change in fair value through income statement 3,323 3,253
Foreign exchange impact on fair value adjustment 158 (1,143)
======================================================= ======== ========
Biological assets 30 September 38,365 32,469
======================================================= ======== ========
Assumptions used for determining fair value of biological
assets
IAS 41 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 IFRS 13 and is categorised
into levels in the fair value hierarchy.
The fair value inputs for salmon eggs are categorised as level
2. 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 fair value inputs for salmon broodstock are categorised as
level 3. The broodstock contain generations of genetic improvements
and cannot be valued purely on the market weight of salmon. The
Group does not sell its broodstock commercially so there is no
observable input in this respect. Therefore, 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
the current seasonally adjusted selling prices for the Group's
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 the age and biomass of the fish is taken into account
in the fair value. Finally, the valuation takes account of future
expected sales volumes.
Change in book value of salmon broodstock
2021 2020
GBP000 GBP000
======================================================= ======== ========
Biological assets 1 October 21,051 18,903
Increase from production 22,428 18,046
Transfer to salmon eggs following harvesting (19,602) (15,206)
Foreign exchange movement before fair value adjustment 169 (1,663)
Change in fair value through income statement 2,530 1,629
Foreign exchange impact on fair value adjustment 124 (658)
======================================================= ======== ========
Biological assets 30 September 26,700 21,051
======================================================= ======== ========
Significant unobservable inputs used in the valuation of salmon
broodstock
2021 2020
============================================== ======= =======
Number of eggs valued in broodstock (m units) 192 167
Average selling price per egg (GBP) 0.128 0.122
Future costs per egg (GBP) (0.015) (0.015)
---------------------------------------------- ------- -------
The fair value inputs for lumpfish fingerlings and shrimp are
categorised as level 2. The calculation of the fair value of
lumpfish fingerlings and shrimp is valued on current selling prices
less transport costs. Internally generated data is used to
incorporate mortality rates and the weight of the biomass.
The fair value inputs for salmon milt are categorised as level
3. Where we have identified individual salmon carrying particular
traits or disease resistance, semen (milt) can be extracted and
deep-frozen using cryopreservation techniques (the process of
freezing biological material at extreme temperatures in liquid
nitrogen). The calculation of the fair value of milt is based on
production and freezing costs and, where appropriate, an uplift to
recognise the additional selling price that can be achieved from
eggs fertilised by premium quality milt.
There is a presumption that fair value can be measured reliably
for a biological asset. However, we sometimes face a situation
where alternative estimates of fair value are determined to be
clearly unreliable (for example, where we establish a new
broodstock farm in a new territory). In such a case, that
biological asset shall be measured at its cost less any accumulated
depreciation and any accumulated impairment losses.
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
GBP365,000. A 10% increase/decrease in the biomass of salmon
broodstock and the quantity of salmon eggs valued would
increase/decrease the fair value of those biological assets by
GBP3,653,000.
The Group is exposed to financial risks arising from changes in
the market value of the salmon eggs, lumpfish fingerlings and
shrimp broodstock that it sells. 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 the price of its products. The
Group reviews its outlook for salmon eggs, lumpfish fingerlings and
shrimp broodstock prices regularly in considering the need for
active financial risk management.
Risk management strategy related to aquaculture activity
The Group is exposed to the following risks relating to its
aquaculture activities. These risks and management's strategies to
mitigate them are described below:
Regulatory and environmental risks
The nature of certain of the Group's operating activities
exposes us to certain significant risks to the environment, such as
incidents associated with releases of chemicals or hazardous
substances when conducting our operations, which could result in
liability, fines, risk to our product permissions and reputational
damage. There is a risk that natural disasters could lead to damage
to infrastructure, loss of resources, products or containment of
hazardous substances. Our business activities could be disrupted if
we do not respond, or are perceived not to respond, in an
appropriate manner to any major crisis or if we are not able to
restore or replace critical operational capacity.
In mitigation we have implemented standards and requirements
which govern key risk management activities such as inspection,
maintenance, testing, business continuity and crisis response.
Biological risks
The Group is exposed to the risk of disease within the Group's
own operations and disease in the market resulting in possible
border closures. In mitigation, the Group:
-- Operates the highest levels of biosecurity.
-- Holds genetic stock at multiple sites and increasingly
sources from its own land-based salmon breeding facilities.
-- Operates containment zones which mitigates the risk of border
closures affecting its ability to import or export.
-- Has placed increased focus on insuring its biological stock.
Outputs and quantities held
Total output of aquaculture activity in the year was:
2021 2020
==================== ============ ============
Salmon eggs 242.0m units 213.0m units
Lumpfish fingerlings 2.4m units 2.7m units
-------------------- ------------ ------------
Total quantities held at 30 September were:
2021 2020
==================== ============ ============
Salmon eggs 79.9m units 78.2m units
Salmon broodstock 1,577 tonnes 1,350 tonnes
Lumpfish fingerlings 2.6m units 4.3m units
-------------------- ------------ ------------
11. Trade and other receivables
2021 2020
Group GBP000 GBP000
============================================================ ======= =======
Trade receivables 24,526 17,052
Less: provision for impairment of trade receivables (2,493) (3,216)
============================================================ ======= =======
Trade receivables - net 22,033 13,836
============================================================ ======= =======
Total financial assets other than cash and cash equivalents
measured at amortised cost 22,033 13,836
Other receivables - contingent consideration 1,028 1,028
============================================================ ======= =======
Total financial assets other than cash and cash equivalents
classified as measured at fair value through profit and
loss 1,028 1,028
Prepayments 11,114 9,917
Other receivables 12,323 14,590
============================================================ ======= =======
Total trade and other receivables 46,498 39,371
============================================================ ======= =======
Other receivables include the following items: VAT recoverable
GBP2,650,000 (2020: GBP1,058,000), research and development
expenditure tax credits and similar items GBP472,000 (2020:
GBP1,121,000), the right to receive an agreed proportion of a key
supplier's harvest* GBP7,302,000 (2020: GBP8,361,000) and in FY20
following the disposal of the entity FVG Chile in the prior year
there was a GBP2,018,000 debtor due from the buyer.
*A financial liability of GBP7,302,200 (2020: GBP8,361,000) is
recognised (within trade payables) for the amount invoiced and
remaining outstanding at the year-end in relation to the Group's
contractual obligation to pay for a specified share of the harvest
of a supplier, regardless of delivery and without recourse to the
supplier. As at 30 September, as the Group has not taken physical
delivery of the harvested product and as the Group does not control
the harvested product, an 'other receivable' of GBP7,302,200 (2020:
GBP8,361,000) has been recorded in relation to the Group's right to
receive the product in the future.
The financial asset at fair value through profit and loss
relates to contingent consideration outstanding from the disposal
of Improve International Limited. This relates to deferred cash
consideration dependent on the delivery of certain future revenues
in financial years ended 30 September 2021 and 30 September 2022
and the fair value is derived from the likely receivable amount
based on current expectations of performance against the
targets.
The fair values of trade and other receivables measured at
amortised cost are not materially different to their carrying
values. As at 30 September 2021 trade receivables of GBP3,060,000
(2020: GBP3,871,000) were past due but not impaired. They relate to
customers with no default history. The ageing analysis of these
receivables is as follows:
2021 2020
GBP000 GBP000
======================= ======= =======
Up to 3 months overdue 2,703 3,244
3 to 6 months overdue 211 569
6 to 12 months overdue 146 58
======================= ======= =======
3,060 3,871
======================= ======= =======
Movements on the Group provision for impairment of trade
receivables are as follows:
2021 2020
GBP000 GBP000
========================================================= ======= =======
At 1 October 3,216 3,448
Provided during the year 54 954
Unused provisions reversed (637) -
Receivables written off during the year as uncollectable (22) (823)
Foreign exchange movements (118) (276)
Disposals through sale of subsidiary - (87)
========================================================= ======= =======
At 30 September 2,493 3,216
========================================================= ======= =======
The movement on the provision for impaired receivables has been
included in the operating costs line in the Consolidated Income
Statement.
Other classes of financial assets included within trade and
other receivables do not contain impaired assets.
12. Trade and other payables
2021 2020
Group GBP000 GBP000
================================================================== ======= =======
Trade payables 20,690 19,269
Other payables 1,978 3,010
Accruals 15,812 10,804
Other payables - tax and social security payments 2,076 850
================================================================== ======= =======
Financial liabilities, excluding loans and borrowings, classified
as financial liabilities measured at amortised cost 40,556 33,933
Other payables - contingent consideration - 825
Financial contracts - hedging instrument 972 3,035
================================================================== ======= =======
Financial liabilities, excluding loans and borrowings, classified
as financial liabilities at fair value through profit or
loss 972 3,860
Financial contracts - hedging instrument 5,889 9,653
================================================================== ======= =======
Financial liabilities, excluding loans and borrowings, classified
as financial liabilities at fair value through hedging reserve 5,889 9,653
Deferred income 162 -
================================================================== ======= =======
Total trade and other payables 47,579 47,446
Less: non-current portion of other payables (911) (1,754)
================================================================== ======= =======
Current portion 46,668 45,692
================================================================== ======= =======
Book values approximate to fair value at 30 September 2021 and
2020.
Contingent
consideration
GBP000
====================================== ==============
Balance at 30 September 2020 825
Net change in fair value (unrealised) 25
Released during the year (850)
====================================== ==============
Balance at 30 September 2021 -
====================================== ==============
The financial liability at fair value through profit and loss
relates to contingent consideration outstanding from business
combinations. The majority of this relates to deferred cash
consideration dependent on the performance of the acquired
businesses and the fair value is derived from the likely
liabilities based on current performance against the targets at
each reporting date. The contingent consideration relates to a
put/call agreement exercisable and payable in 2022 to acquire the
remaining 20% stake in Benchmark Genetics (USA) Inc (formerly
Akvaforsk Genetics Center Inc) for a sum determined by performance.
The minimum consideration is NOK 1 (one Krone) payable in the event
the business underperforms the minimum target set and the maximum
consideration is capped at NOK 60m. Based on current forecasts,
payment will be NOK 1 (one Krone) and this assumption has been used
in calculating the fair value of the liability.
Of the financial contracts GBP6,708,000 (2020: GBP12,048,000)
relates to a CCS which was entered to fully match the timing and
tenor of the underlying new senior secured floating rate listed
bond issue of NOK 850m. The first part of the CCS exchanged NOK
637.5m from NOK to GBP and has been designated as a cash flow hedge
and any changes in the effective portion of changes in its fair
value will be taken directly to equity within the hedging reserve
and recycled to profit or loss as the bond impacts the profit or
loss. The second part exchanged NOK 212.5m from NOK to USD. This
element has not been designated as a cash flow hedge and is posted
to profit or loss as a fair value hedge.
13. Loans and borrowings
Group
2021 2020
GBP000 GBP000
=========================== ======= =======
Non-current
2023 850m NOK Loan notes 75,478 75,497
Bank borrowings 19,314 20,366
Lease liabilities (Note 7) 14,945 7,956
=========================== ======= =======
109,737 103,819
=========================== ======= =======
Current
Bank borrowings 1,612 2,856
Lease liabilities (Note 7) 9,042 2,483
=========================== ======= =======
10,654 5,339
=========================== ======= =======
Total loans and borrowings 120,391 109,158
=========================== ======= =======
The fair value of 2023 850m NOK Loan notes as at 30 September
2021 is GBP73,981,000. At 30 September 2020 the fair value was not
materially different to the nominal value and has not been
separately disclosed.
On 21 June 2019, the Group successfully completed a new senior
secured floating rate listed bond issue of NOK 850m. The bond which
matures in June 2023, has a coupon of three-month NIBOR + 5.25%
p.a. with quarterly interest payments, and is be listed on the Oslo
Stock Exchange.
A USD 15m Revolving Credit Facility ('RCF') has been provided by
DNB Bank ASA (50%) and HSBC UK Bank PLC (50%). This was undrawn at
30 September 2021 and 30 September 2020.
SalmoBreed Salten AS had the following loans (which are
ring-fenced debt without recourse to the remainder of the Group) at
30 September 2021:
-- Term loan with a balance of NOK 180.0m (2020: NOK 194.4m)
provided by Nordea Bank Norge Abp. The loan is a five-year term
loan ending November 2023 at an interest rate of 2.65% above
three-month NIBOR
-- NOK 20.0m 12-month working capital facility provided by
Nordea Bank Norge Abp. This was undrawn at 30 September 2021 (2020:
15.6m NOK drawn)
-- Term loan with a balance of NOK 44.7m (2020: NOK 49.3m)
provided by Innovasjon Norge. The loan is a 12-and-a-half-year term
loan ending March 2031 at an interest rate of 4.2% above Norges
Bank base rate
-- NOK 21.75m loan provided by Salten Aqua ASA (the minority
shareholder). The loan attracts interest at 2.5% above three-month
NIBOR and is repayable in a minimum of five years, but not before
the Nordea term loan.
The lease liabilities are secured on the assets to which they
relate.
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