TIDMBMK
RNS Number : 0014I
Benchmark Holdings PLC
30 November 2022
30 November 2022
Benchmark Holdings plc
("Benchmark", the "Company" or the "Group")
Full Year Results for the Financial Year ended 30 September
2022
A year of sustained growth and strategic delivery
Benchmark, the aquaculture biotechnology company, announces its
full year audited results for the year ended 30 September 2022 (the
"period").
Financial highlights - strong FY2022 results delivered ahead of
original market expectations
-- Revenue increase of 27% (+21% CER)
o Advanced Nutrition - excellent performance as the Company
continued to capitalise on renewed commercial focus and recovery in
the shrimp markets post pandemic; revenues increased by 14% (+7%
CER)
o Genetics - strong performance benefitting from high demand for
the Company's salmon eggs delivered from Benchmark's new incubation
centre in Iceland; revenue growth +24% (+21% CER)
o Health - first full year of sales from new sea lice solution
Ectosan (R) Vet and CleanTreat (R) resulting in revenue growth of
157% (+157% CER)
-- Adjusted EBITDA +60% (+54% CER) driven by growth in the three
business areas and continued financial discipline
-- Adjusted EBITDA margin of 20% (FY21: 16%). Adjusted EBITDA
margin excluding fair value uplift from biological assets increased
to 19% (FY21: 13%)
-- Loss for the period increased to GBP30.5m as a result of
increased depreciation associated with CleanTreat(R) units and
higher net finance expenses
-- Disciplined investment in growth areas with tangible capex totalling GBP10.8m
-- Refinancing of NOK 850m bond and post period end refinancing of USD $15m RCF
-- Cash and cash equivalents of GBP36.4m and available liquidity of GBP45.8m
-- At 28 November, cash and cash equivalents of GBP35m and available liquidity of GBP51m
GBPm FY 2022 FY 2021 % AER % CER**
-------------------------------------- -------- -------- ------- --------
Revenue 158.3 125.1 27% 21%
-------------------------------------- -------- -------- ------- --------
Adjusted
-------------------------------------- -------- -------- ------- --------
Adjusted EBITDA(1) 31.2 19.4 60% 54%
-------------------------------------- -------- -------- ------- --------
Adjusted EBITDA excluding fair value
uplift from biological assets 29.6 16.1 83% 76%
-------------------------------------- -------- -------- ------- --------
Adjusted operating profit 9.1 10.8 (15%) (23%)
-------------------------------------- -------- -------- ------- --------
Statutory
-------------------------------------- -------- -------- ------- --------
Operating loss (7.9) (5.4) (46%) (61%)
-------------------------------------- -------- -------- ------- --------
Loss before tax (23.2) (9.2) (152%) (167%)
-------------------------------------- -------- -------- ------- --------
Loss for the period (30.5) (11.6) (163%) (168%)
-------------------------------------- -------- -------- ------- --------
Basic loss per share (p) (4.60) (1.93) (138%)
-------------------------------------- -------- -------- ------- --------
Net debt(3) (73.7) (80.9) 9%
-------------------------------------- -------- -------- ------- --------
Net debt excluding lease liabilities (47.5) (56.9) 17%
-------------------------------------- -------- -------- ------- --------
** 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
Business Area Performance - GBPm FY 2022 FY 2021 % AER % CER**
Revenue
-------- -------- ------ --------
Genetics 58.0 46.8 24% 21%
-------- -------- ------ --------
Advanced Nutrition 80.3 70.5 14% 7%
-------- -------- ------ --------
Animal Health 20.1 7.8 157% 157%
-------- -------- ------ --------
Adjusted EBITDA(1)
-------- -------- ------ --------
Genetics 16.0 11.5 39% 39%
-------- -------- ------ --------
* Net of fair value movements in biological assets 14.4 8.2 75% 76%
-------- -------- ------ --------
Advanced Nutrition 19.0 13.8 38% 29%
-------- -------- ------ --------
Animal Health 0.1 (2.7) 104% 102%
-------- -------- ------ --------
** 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 - excellent performance
-- Excellent performance driven by commercial focus, continued
innovation and cost discipline, supported by positive market
conditions
-- New products and product upgrades brought to market including
Artemia separation tool 'Sep-Art Automag' which delivers
sustainability benefits
-- Closure of trial facilities in Thailand as part of strategy to optimise operations
Genetics - continued growth
-- Continued growth in core salmon egg business with record sales in FY2022
-- New incubation centre in Iceland delivering increased quality
and capacity which was instrumental in satisfying peak demand in
the year
-- Commercialisation of SPR shrimp progressing, leveraging
Advanced Nutrition's market position in shrimp
Health - further commercialisation progress
-- Roll-out of Ectosan(R) Vet and CleanTreat(R) progressing with
increasing customer adoption. Solution delivered consistent
efficacy above 99%, with enhanced animal welfare and protection of
the environment
-- Marketing Authorisation for Ectosan(R) Vet and CleanTreat(R)
in Norway extended to one reuse of water
-- Marketing Authorisation obtained in the Faroe Islands
-- Ectosan(R) Vet patent grant approved giving 20 year protection
Group - ESG commitment, continued integration and delivery
against strategic priorities
-- ESG - on track to achieve our Net Zero targets with
implementation of carbon reduction plan; issue of first Green bond
validates strong ESG credentials
-- Continued Group integration by combining the commercial
efforts across our salmon products, making the business more
customer-centric and increasing efficiency
-- Excellent employee engagement results aligned to the Group's
goal of making Benchmark "A Great Place to Work"
-- Looking forward we remain focused on our four strategic pillars:
o Maintain and grow our leadership position in established
markets
o Expand our business through the launch of new products and
entry into new markets
o Continue to embed the new One Benchmark culture and to
integrate the Group to realise synergies
o Pursue add-on acquisitions within core areas, adhering to
strict criteria and making optimal use of our capital structure
Current trading and outlook - good momentum and tracking in-line
with management expectations
-- Good start to the year and positive momentum in the business
-- The diversified nature of the business and management's
proactive commercial approach creates resilience and mitigates the
potential impact from ongoing cost inflation and macroeconomic
pressures
-- Management expects that the recently announced change in tax
regime for aquaculture producers in Norway will have a marginal
direct effect on the Group's business
-- Well progressed towards dual listing on Euronext Growth Oslo
as announced this morning; intention to uplist to the Oslo Børs in
H1 calendar year 2023
-- Longer term, management believe the Group is uniquely
positioned in an industry that is structurally growing driven by
megatrends
Trond Williksen, CEO, commented:
" In FY2022 Benchmark delivered another year of growth and
strategic progress, underpinned by four quarters of consistently
improved financial results. This demonstrates the success of our
restructuring and culture change, the quality and potential of our
business and the talent and commitment of our people, as well as
the underlying strength of our markets.
"Our strategic and commercial focus have contributed to strong
results. Going into the new financial year, there is good momentum
in line with our expectations and positive dynamics in our industry
creating significant opportunities to deliver value for all our
stakeholders."
Details of analyst / investor call today
There will be a call at 9.00am UK time today for analysts and
investors. To attend the call, please register via Investor Meet
Company:
https://www.investormeetcompany.com/benchmark-holdings-plc-analyst-meeting-q4-results/register-investor
.
You can address registration questions to MHP Communications on
+44 (0)20 3128 8004, or by email on benchmark@mhpgroup.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 Tel: 020 3128 8004
Katie Hunt, Reg Hoare, Veronica Farah benchmark@mhpgroup.com
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
Chairman's Statement
A year of delivery
I am proud to report a second year of strong performance for
Benchmark, continuing a path that started in 2019 with a
substantial reorganisation of the business and the appointment of a
new management team.
In 2022 our focus was on delivering profitable growth in each of
our established core areas, on fully commercialising our recently
launched products, and on maintaining disciplined cash management
and investment. Together, this translated into a very strong
performance with significant top line growth and improved
underlying profitability. We remain committed to continuing on this
path of consistent delivery to reach sustainable profitability and
cash generation, and ultimately attractive shareholder returns.
Macroeconomic and geopolitical conditions in the year materially
affected markets around the world and impacted the performance of
our shares. Smaller growth companies were particularly affected by
fund outflows and a change in investor sentiment. This is
particularly disappointing given the significant progress that the
Company made during the year. However, I am confident that we are
building fundamental value for our shareholders, which will
crystallise in the coming years.
Performance
The Group delivered excellent growth in the year with a 27%
increase in revenue and an 83% increase in Adjusted EBITDA
excluding fair value movements from biological assets. Importantly,
each of our three business areas delivered higher revenues and
Adjusted EBITDA, with growth in established areas and progress in
the commercialisation of new solutions, including Ectosan(R) Vet
and CleanTreat(R) and SPR shrimp genetics. We now have a solid,
diversified, well-balanced Group across geographies and species
which provides multiple opportunities for growth as well as
resilience to volatility in specific markets.
Adjusted EBITDA is the key profitability measure we use to track
underlying performance. In FY22 the Group delivered Adjusted EBITDA
of GBP31.2m (FY21: GBP19.4m) and an Adjusted EBITDA margin of 20%
(FY21: 16%) as a result of top line growth, increased asset
utilisation and good cost control.
There was an increase in depreciation related to our
CleanTreat(R) operations and higher net finance costs reflecting
foreign exchange volatility as well as costs associated with the
refinancing of our pre-existing NOK bond. This led to a net loss
for the year of GBP30.5m (FY21: GBP11.6m loss).
Financing
An area of focus for the Board in FY22 was to maintain a solid
financial position to support the Company's trading momentum and
growth strategy. To this end, in November 2021 the Company raised
GBP20.7m through a placing of shares with existing and new
shareholders which provided additional headroom. Later in the year,
in September 2022, in challenging macroeconomic and market
conditions, the Company successfully refinanced its NOK 850 million
bond which was due to mature in June 2023. The refinancing was
achieved through the issue of a NOK 750 million unsecured green
bond maturing in 2025 which validates our strong ESG credentials,
and places us in a solid financial position, particularly in light
of the ongoing challenging environment in the financial
markets.
Sustainability
Benchmark's mission is to drive sustainability in aquaculture.
In alignment with our mission, sustainability is front and centre
in our strategy and our operations. Our products are designed to
deliver improved yield and animal welfare, improving resource
efficiency and reducing environmental impact. In addition, we
manage our own operations responsibly with an ambitious commitment
to energy transition. In 2022, we made substantial progress towards
our Net Zero goals by developing a comprehensive emissions
reduction programme for our Thailand facility centred around the
installation of solar panels which commenced in 2022. In addition,
during the year we conducted a climate risk assessment across the
Group for the first time representing an important step towards
TCFD (Task Force on Climate-related Financial Disclosures)
compliance in 2023.
Board
On 29 November 2021, the Board appointed Atle Eide as
Non-Executive Director. Given Atle's previous role as a director of
Kverva AS, a significant shareholder in the Company, he is not
deemed an independent director. Atle has extensive experience in
the seafood industry including in his former roles as Chairman of
Salmar ASA and CEO of Mowi ASA, and as an investor, bringing value
to the Board.
Regular Board evaluation is an important element in maintaining
high standards of corporate governance and Board effectiveness. In
2022, the Board conducted an internal evaluation exercise. The
results, which were reviewed at the September 2022 Board meeting,
confirmed that the Board continues to perform effectively and with
a high degree of Director engagement.
Board meetings were held at various Group locations during the
year, enabling the Directors to interact broadly with our people,
promoting engagement and an understanding of local cultures.
Euronext Growth Listing
During the year, we communicated our intention to pursue a
listing in Oslo as the world's largest seafood-focused market. Our
decision followed extensive consultation with shareholders,
concluding that the Company would benefit from a listing in Oslo to
expand its access to a global base of specialist seafood investors
and analysts and to improve liquidity in our shares.
The Company's plan to launch a dual-listing on Euronext Growth
Oslo before the end of the calendar year is well progressed. The
dual-listing represents a first step towards a listing on the Oslo
Stock Exchange (Oslo Børs), the world's leading listed venue for
seafood and aquaculture companies. The Board intends to uplist the
Company to the Oslo Børs from Euronext Growth Oslo in the first
half of the calendar year 2023. In tandem, we intend to consult
with shareholders on whether to maintain the admission of the
Company's shares to trading on AIM. The intended dual listing on
Euronext Growth Oslo and the uplisting to the Oslo Børs are both
subject to market conditions.
In connection with its proposed admission to Euronext Growth
Oslo, Benchmark has today announced the terms of a potential
private placement and retail offering in Norway, representing in
aggregate 5% of the Company's enlarged issued share capital.
Looking ahead
While macroeconomic conditions remain challenging as we enter
2023 with high levels of cost inflation and interest rates
affecting consumer spend, Benchmark has started the year positively
and is prepared to meet the challenges of an inflationary
environment through a combination of price increases and
operational efficiencies to mitigate inflationary pressure.
Moreover, the Company enters 2023 with good momentum, and with a
clear strategy that will help deliver continued growth and progress
towards sustainable profitability and cash generation.
Longer term, Benchmark is well placed to deliver growth and
attractive shareholder returns. The Company is well invested, with
multiple, visible growth opportunities underpinned by existing
infrastructure. This, together with Benchmark's leading market
positions and the megatrends driving the aquaculture industry, give
us confidence in the future.
Our strong performance this year could not have been achieved
without the efforts of the 800+ people who make up this great
company. Their hard work, integrity and expertise have shone
through, and on behalf of the Board, I want to thank them for
everything they have done, and continue to do, for Benchmark. I
also want to thank and acknowledge our shareholders and other
stakeholders for their continued support.
Peter George
Chairman
Chief Executive Officer's Review
Sustained growth and strategic delivery
Benchmark delivered excellent growth in revenue and Adjusted
EBITDA in FY22, building on its track record of continuous
quarterly improvement since the restructuring was completed in
FY20. Revenues grew by 27% to GBP158.3m in the year, and Adjusted
EBITDA excluding fair value movements from biological assets grew
by 83% to GBP29.6m. On a constant exchange rate basis, Group
revenue and Adjusted EBITDA excluding fair value movements, were up
21% and 76%, respectively. Since the end of FY20, we have increased
revenues by 50% and Adjusted EBITDA by 115%.
Despite the strong revenue growth and the progress in our
underlying profitability, the Group reported a loss before tax of
GBP23.2m, (2021: loss of GBP9.2m). This is due to a GBP11.5m
increase in depreciation principally related to the leased vessels
used in the CleanTreat(R) operations and an increase in finance
costs due to higher interest rate charges and non-cash movements
associated with the accounting for the refinancing of our
pre-existing NOK bond. Total loss for the year was GBP30.5m (FY21:
GBP11.6m).
Trading and operational performance was strong in our three
business areas and all reported a significant increase in revenues
and Adjusted EBITDA. Advanced Nutrition continued its growth trend
with revenues up by 14%; Genetics increased revenues by 24%,
benefitting from strong demand for our salmon eggs, which we were
able to fulfil through our recent investment in a new bio-secure
incubation centre in Iceland; and Health reported 157% growth in
revenues, benefitting from the launch of its sea lice solution,
Ectosan(R) Vet and CleanTreat(R). While the commercialisation of
Ectosan(R) Vet and CleanTreat(R) is still in the initial phase, we
now have three well-performing and growing business areas with a
visible path to Group profitability and cash generation.
We maintained our ongoing financial discipline on costs,
investment and cash. Operating costs and R&D were GBP51.4m, a
14% increase from the prior year due to higher activity levels and
cost inflation. Our ongoing cost control, together with higher
asset utilisation resulted in an Adjusted EBITDA margin (excluding
fair value movement from biological assets) of 19% (FY21: 13%).
Capex during the year totalled GBP10.8m (FY21: GBP18.0m) reflecting
our new investment discipline and completion of investments to
support our main growth vectors. Our main investment was the
construction of a new incubation centre for salmon eggs in Iceland
which allows us to meet seasonal periods of peak demand. This was
particularly welcome this year when our customers experienced a
shortage of supply in our market.
By business area, Genetics reported revenues of GBP58m, 24%
above last year driven primarily by higher salmon egg sales.
Adjusted EBITDA before fair value movement in biological assets of
GBP14.4m was 75% above last year (FY21: GBP8.2m). Strategically, we
continued to build on our stronghold in salmon, covering all
production paradigms and producing regions. In addition, our focus
was on the launch of our SPR shrimp genetics in Asia and the
Americas, an important growth vector for the Group in the coming
years. Innovation is a key driver of our success in Genetics and
during the year we strengthened our team with the appointment of
Dr. Ross Houston as Director of Innovation for our Genetics
business and Chair of our Group Innovation Board.
Advanced Nutrition reported revenues of GBP80.3m, 14% ahead of
FY21 driven by increased sales in all product areas - Artemia,
Health and Diets. Adjusted EBITDA of GBP19.0m was 38% up on the
prior year (FY21: GBP13.8m). We continued to capitalise on our
enhanced commercial focus and structure and on our efforts to
improve our operations to drive efficiency and margins. This
included the closure of our trial facility in Thailand moving to
more effective solutions in partnership with external
providers.
In Health we reported revenues of GBP20.1m, (FY21: GBP7.8m) as a
result of increased Ectosan(R) Vet and CleanTreat(R) sales
following the commercial launch at the end of last year. Adjusted
EBITDA was GBP0.1m (FY21: loss GBP2.7m). The roll-out of Ectosan(R)
Vet and CleanTreat(R) is one of the Group's key strategic
priorities and we made further progress during the year, increasing
adoption of the new solution in the market. In addition, we reached
important milestones towards optimising our solution. Treatment
times were reduced, a marketing extension for a second re-use of
treatment water was obtained and we continue to work with our
customers on new configurations for our CleanTreat(R) systems
adapted to our customer's infrastructure.
Strategic delivery
Benchmark's strategy is directed at becoming the leading
aquaculture biotechnology company driving sustainability and
delivering attractive shareholder returns. Our strategy represents
a roadmap to achieve this and has three main elements:
-- maximising the opportunity in our established business
through a proactive commercial effort and continuous operational
improvement, benefitting from structural growth in the industry
-- extending our platform through additions to our product
offering and geographic expansion within our core areas
-- pursuing add-on opportunities within our core areas and
applying disciplined return parameters
At the beginning of 2022, we set out five strategic Group
priorities in areas that will drive growth and profitability for
the Group. These were the roll-out of Ectosan(R) Vet and
CleanTreat(R), the commercialisation of our shrimp genetics,
regaining leadership in Artemia within our Advanced Nutrition
business and delivering ESG and People agendas that are aligned to
our mission and that support our new performance-driven culture.
This clear strategic focus enables us to direct resources and
monitor progress. Overall, progress in all areas was positive in
2022.
As mentioned above we made important strategic progress in the
roll-out of our Ectosan(R) Vet and CleanTreat(R) solution.
Our SPR shrimp in Genetics was commercially launched in the year
with growing sales albeit from a small initial base. Our leading
position in the shrimp market through our Advanced Nutrition
business creates an important synergy facilitating market
entry.
In Advanced Nutrition, our priority for FY22 was to regain a
leadership position in the global Artemia market following a period
of oversupply which resulted in lower prices in the market
affecting our premium positioning. Through a renewed commercial
effort brought about by a management change in the business, we
have successfully recovered our position and gained momentum for
the future.
Looking forward to 2023, our Group priorities represent a
continuation of our current effort including the roll-out of
Ectosan(R) Vet and CleanTreat(R) and maintaining our leadership
position in Advanced Nutrition across our three product areas. In
Genetics, our focus will be on becoming the supplier of choice for
salmon eggs across all markets while continuing our work to
commercialise our shrimp genetics.
'One Benchmark' culture
One of our key focus areas over the last two years has been to
create a stronger, more aligned group to drive commercial
performance and realise synergies and efficiencies. The primary
engine of this culture change is a strategic priority framework
working alongside a performance management framework with our
values to guide our behaviour.
This unified culture has allowed us to drive further integration
by combining functions and establishing cross-group initiatives
which are delivering results. An example of this is the combination
of the marketing and commercial functions around species allowing
us to become more customer-centric.
Looking forward
We have had a good start to the year and there is good momentum
in the business. Cost inflation and other macroeconomic pressures
will continue to be a feature across the world in 2023 and we are
not immune. However, we have a well diversified, balanced business
which creates resilience to challenges in individual markets as
well as opportunities. In addition, we will continue to proactively
mitigate potential pressure on our business and our margins through
pricing, supplier management and operational improvements. The
recently announced change in the tax regime for aquaculture
producers in Norway is expected to have a marginal direct effect on
our business.
Looking further into the future, Benchmark is uniquely
positioned in an industry that is structurally growing and driven
by multiple megatrends. This creates significant opportunity for
growth and increasing returns for shareholders in the near and
medium term and for many years to come.
Trond Williksen
Chief Executive Officer
Financial Review
Strong and positive performance in the year
FY22 has been a year where our focus on commercial execution has
paid off. With all three business areas now commercially focused,
we have delivered growth across the board and have been able to
consistently deliver progress on our strategic objectives. We have
been able to leverage off the investments made in FY21 to meet
demand in the market within our Genetics business area. We have
continued to generate sales growth above market growth , albeit
aided by forex tailwinds from a strong US dollar in Advanced
Nutrition, and have had a full year of Ectosan(R)Vet and
CleanTreat(R) sales moving Health from being a development business
area to a commercial one.
Overview of reported financial results
During 2022, the Group's focus was on continuing to deliver a
strong commercial result and advancing its strategic
priorities.
Advanced Nutrition continued a track record of strong commercial
focus in 2022. Genetics also experienced strong sales in the year
and with a full year of Ectosan(R) Vet and CleanTreat(R) sales in
Health this resulted in an increase in Group revenue of 27% to
GBP158.3m in the year (2021: GBP125.1m). This increase in sales
meant that Gross Profit increased to GBP83.1m (2021: GBP65.6m).
Gross Margin was flat at 52% (2021: 52%). Using the same foreign
exchange rates experienced in 2021 (constant currency(5) ) revenue
increased by 21%.
As Reported (GBPm unless otherwise % CER
stated) 2022 2021 % AER **
Revenue 158.3 125.1 27% 21%
====== ====== ====== ======
Operating loss (7.9) (5.4) (46%) (61%)
====== ====== ====== ======
Loss before tax (23.2) (9.2) (152%) (167%)
====== ====== ====== ======
Loss for the period (30.5) (11.6) (163%) (168%)
====== ====== ====== ======
Basic loss per share (p) (4.60) (1.93) (138%) -
====== ====== ====== ======
** Constant exchange rate (CER) figures derived by retranslating
current year figures using previous year's foreign exchange
rates
Adjusted Measures (GBPm unless otherwise % CER
stated) 2022 2021 % AER **
Gross profit 83.1 65.6 27% 22%
====== ====== ===== =====
Gross profit % 52% 52% - -
====== ====== ===== =====
Adjusted EBITDA(1) 31.2 19.4 60% 54%
====== ====== ===== =====
Adjusted EBITDA(1) margin % 20% 16% - -
====== ====== ===== =====
Adjusted Operating Profit(2) 9.1 10.8 (15%) (23%)
====== ====== ===== =====
Net debt(3) (73.7) (80.9) 9% -
====== ====== ===== =====
** 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
Business area performance
We continued to manage costs across the Group very closely.
Operating costs increased by 17% to GBP44.7m (2021: GBP38.2m) due
to the investment in new growth areas, mainly the ramp-up of
activities for the launch of Ectosan(R)Vet and CleanTreat(R) and
increased activity post the pandemic. Expensed R&D decreased by
5% to GBP6.7m (2021: GBP7.0m).
Adjusted EBITDA increased by 60% to GBP31.2m (2021: GBP19.4m)
driven by increased sales in Advanced Nutrition, a strong finish to
the year in Genetics and a full year of commercial activities in
Health for Ectosan(R)Vet and CleanTreat(R) 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.
We use growth at constant exchange rate metrics when considering
our performance, whereby currency balances are retranslated at the
same exchange rate in use for the prior year to illustrate growth
on a currency like for like basis.
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. We also report this
adjusted measure after depreciation and amortisation of capitalised
development costs ("Adjusted Operating Profit") as the Board
considers this reflects the result after taking account of the
utilisation of the recently expanded production capacity. In
addition, in line with the Salmon industry, we also report AEBITDA
excluding fair value uplift under IAS 41. 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 20% to 291 million eggs.
Revenues of GBP58.0m were up 24% (2021: GBP46.8m), +21% in constant
currency.
Demand for eggs in Norway increased by 23% during the year,
which we were able to supply due to the increased capacity in our
new incubation house in Iceland. We also saw increased demand from
all other territories in the year. This resulted an increase in
revenue from salmon eggs of 24% to GBP38.3m (2021: GBP30.9m).
In non-product based revenue streams, Genetics Services
continued to deliver in the year reflecting the strength and depth
of expertise of our Genetics team and our IP in the business,
contributing GBP1.3m (2021: GBP1.3m). Revenues from harvested fish
were aided by increased salmon prices producing harvest income in
the year of GBP8.5m (2021: GBP6.2m). Royalties earned from use of
our genetic IP fell in the year, with sales down to GBP0.8m (2021:
GBP1.0m) as the expected unwind of contracts continues for the next
year. Revenues from other products totalled GBP9.1m (2021:
GBP7.4m).
Gross profit increased by 24% in 2022 to GBP32.0m (2021:
GBP25.9m) and gross margin remained unchanged at 55%. Increased
gross profit from the core salmon business was offset by losses in
the newly launched SPR shrimp and tilapia, and the non-cash fair
value increase in biological assets fell by 52% in 2022 to GBP1.6m
(2021: GBP3.3m).
Shrimp and tilapia, both of which are areas of investment,
delivered combined Adjusted EBITDA losses in the period of GBP3.1m
(2021: GBP1.4m). The shrimp loss of GBP1.7m (2021: GBP0.9m)
followed the ceasing of capitalising costs after the commercial
launch of SPR shrimp in the year. We capitalised costs of GBP1.0m
in 2022 related to development of the shrimp nucleus before it
launched commercially. The loss in Tilapia was driven by the
capacity expansion being delayed due to COVID and a one-off GBP0.4m
loss related to a provision for committed running costs, over and
above the lease obligations, on a production site which is no
longer used.
R&D spend was lower and operating costs were higher than
2021 by GBP0.6m and GBP2.2m respectively as the business grew.
R&D reduced due to good cost optimisation in this area. 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
supported by cutting edge genetic technologies. 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 (2021: loss of GBP0.6m).
In both 2022 and 2021, the joint venture suffered a biological
event which drove the losses.
Genetics has continued to establish its facility in Chile and
with overall AEBITDA losses of GBP3.4m and GBP0.6m invested in
capex in this new facility in 2022 (2021: GBP2.6m and 1.3m). The
facility has potential production capacity of 50 million eggs and
is currently utilising capacity of around 30 million eggs. During
the year we sold 4 million eggs.
All these factors contributed to increased AEBITDA of GBP16.0m
(2021: GBP11.5m) and AEBITDA margin of 28% (2021: 25%). AEBITDA
excluding fair value increased by 75% to GBP14.4m, an AEBITDA
margin of 25% (2021: 17%).
Advanced Nutrition
Throughout 2022, Advanced Nutrition delivered a strong
performance driven by continued commercial focus. As a result,
revenues in Advanced Nutrition increased by 14% in the year (7% at
CER). This is notable as some key markets continued to be impacted
by COVID-19 and the business faced significant logistical
challenges as a result of the pandemic. The strong commercial focus
has allowed us to continue to strengthen our position and take
increased market share.
In 2022, 73% of our revenues derived from shrimp with the
balance 27% of derived from the Mediterranean sea bass and sea
bream sector.
By product area, we drove growth in all product areas. Artemia
grew revenues by 7% (at CER) to GBP37.1m, followed by diets up 7%
(at CER) to GBP35.1m. Health which covers our probiotic and
environmental pond management portfolio grew revenues by 6% (at
CER) to GBP8.1m.
The increase in sales of GBP9.8m resulted in an increase in
gross profit of GBP6.6m and drove the gross margin up from 51% to
53%. This increase in margin was offset in part by an increase in
operating costs as we grew the business, but there continued to be
good cost control throughout this year. This led to Advanced
Nutrition reporting AEBITDA of GBP19.0m (2021: GBP13.8m) and an
increase in AEBITDA margin from 20% to 24%.
Within this business area, an important barrier to entry is the
access to GSL Artemia where we, through our relationship with the
Great Salt Lakes Cooperative have access to 44% of the annual
harvest of Artemia from the Great Salt Lakes. Whilst the harvest
can vary from year to year and we saw very high harvest levels in
19/20, the last two harvests were lower; the 20/21 harvest was
1,168 metric tonnes and the 21/22 harvest was 1,104 metric tonnes
which are considered normal harvest levels.
Health
Health reported revenue of GBP20.1m (2021: GBP7.8m) reflecting
the first full year of sales of Ectosan(R)Vet and CleanTreat(R) of
GBP14.8m of which GBP2.5m relates to revenue for vessel-related
costs and a marginal increase in sales of our existing sea lice
treatment, Salmosan(R) Vet of GBP5.4m (2021: GBP5.1m).
Gross profit increased by GBP4.9m to GBP8.6m, a margin of 43%,
with the launch of Ectosan(R)Vet and CleanTreat(R) combined with
increased margins from Salmosan(R) Vet.
During the year, the focus of this business area was to launch
Ectosan(R)Vet and CleanTreat(R) in Norway. The first vessel
launched in August 2021, with the second vessel launching in
December 2021. These activities drove an increase in operating
costs to GBP8.1m (2021: GBP6.2m) Adjusted EBITDA for the business
area was GBP0.1m (2021: GBP2.7m).
Cost Inflation
As noted earlier, cost control remains of significant importance
in Benchmark and in the current cost environment becomes even more
so. During the year, we focussed on a number of areas to mitigate
cost inflation. In Nutrition, the Operations team focused on
ensuring lean production and with better volumes, getting better
cost per units through to support margin. The procurement team were
consistently challenged to maintain or get better pricing for raw
materials. From an energy perspective, we have access to lower cost
energy in both Norway and Iceland where we have Genetics production
facilities and we have also commenced the plan to put solar panels
on our facility in Thailand. Whilst we are not immune from
inflation, we as a business seek to use multiple ways to mitigate
this as we move forward.
Exceptional items
Items that are material because of their nature whose
significance is sufficient to warrant separate disclosure and
identification within the consolidated financial statements are
referred to as exceptional items. The separate reporting of
exceptional items helps to provide an understanding of the Group's
underlying performance.
Exceptional expenses were fully offset by exceptional credits in
the year. Exceptional expenses related to legal and professional
costs in relation to the proposed dual listing on the Oslo exchange
of GBP0.8m, and restructuring costs of GBP0.4m including those
relating to a legal dispute within a divested business, and costs
relating to the closure of the Thai research centre in Advanced
Nutrition. These costs were offset by a credit of GBP1.2m relating
to additional contingent consideration received in the period
following the disposal of Aquaculture UK on 7 February 2020 and
Improve International on 23 June 2020.
Depreciation, amortisation and impairments
Depreciation and impairment of tangible assets was GBP19.9m
(2021: GBP8.4m), with depreciation charge of GBP19.9m (2021:
GBP8.5m) and impairment reversal of GBPnil (2021: GBP0.1m). The
depreciation charge in the year increased due to the launch of
CleanTreat(R) where the vessels are right-of-use assets held under
lease agreements. In total, depreciation and impairment charges on
leased assets under IFRS 16 was GBP11.3m (2021: GBP3.3m).
Amortisation and impairments of intangible assets totalled
GBP19.2m (2021: GBP16.3m). The amortisation charge includes GBP2.2m
(2021: GBP0.3m) relating to capitalised development following
commercialisation of Ectosan(R)Vet and CleanTreat(R) and SPR
shrimp.
Research and development
Expenses Total expensed and capitalised
As % As % As %
of of of As %
GBPm 2022 sales 2021 sales 2022 sales 2021 of sales
---- ------ ---- ------ ------ -------- ----- -----------
Expensed R&D by business
area
==== ====== ==== ====== ====== ======== ===== ===========
Genetics 4.3 7% 4.9 10% 5.3 9% 6.8 15%
==== ====== ==== ====== ====== ======== ===== ===========
Advanced Nutrition 2.0 2% 1.9 3% 2.1 3% 2.2 3%
==== ====== ==== ====== ====== ======== ===== ===========
Health 0.4 2% 0.2 3% 1.0 5% 2.9 36%
==== ====== ==== ====== ====== ======== ===== ===========
Total research and development 6.7 4% 7.0 6% 8.4 5% 11.8 9%
==== ====== ==== ====== ====== ======== ===== ===========
Expensed R&D activities decreased in the year by GBP0.3m
with Genetics having good cost optimisation in this area while
continuing to focus on improvements in the breeding nucleus. Health
spending remained low 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.
Other operating costs
As % As %
of of
GBPm 2022 sales 2021 sales
Operating Expenses by Business Area
==== ====== ==== ======
Genetics 11.1 19% 8.9 19%
==== ====== ==== ======
Advanced Nutrition 21.5 27% 19.9 28%
==== ====== ==== ======
Health 8.1 41% 6.2 79%
==== ====== ==== ======
Corporate (net) 4.0 3.2
==== ====== ==== ======
Total operating expenses 44.7 28% 38.2 31%
==== ====== ==== ======
Other operating costs increased from GBP38.2m in 2021 to
GBP44.7m in 2022. The increase in costs include increased costs in
Health as we had a full year of commercial launch of Ectosan(R)Vet
and CleanTreat(R) and higher costs as we commercially launched
Chile and SPR shrimp and continued to grow in Nutrition.
Net finance costs
Analysis
GBPm 2022 2021
----- -----
Net Finance expenses
===== =====
Interest Income (0.3) (0.1)
===== =====
Foreign Exchange losses/(gains) (2.8) (2.8)
===== =====
Interest on bond and bank debt 6.2 6.0
===== =====
Amortisation of deferred financing fees 1.9 1.0
===== =====
Penalty for early settlement of the bond 1.6 -
===== =====
Movements of cash flow hedges 7.0 (1.4)
===== =====
Finance lease interest 1.7 1.1
===== =====
Total net finance expenses 15.3 3.8
===== =====
The Group incurred net finance costs of GBP15.3m during the year
(2021: GBP3.8m). Included within this was interest charged on the
Group's interest-bearing debt facilities of GBP9.7m (2021: GBP6.9m)
of which GBP1.6m related to the early redemption penalty for the
settlement of the NOK bond and with a further GBP1.9m of this being
amortisation of the deferred finance costs (2021: GBP1.0m). Net
foreign exchange gains of GBP2.8m (2021: net gain of GBP2.8m) arose
due to the movement in exchange rates on intercompany loans and
external debt. Movements on the cash flow hedges associated with
the Groups NOK bond debt resulted in charges of GBP7.0m (2021: gain
of GBP1.4m).
Statutory loss before tax
The loss before tax for the year at GBP23.2m is higher than the
prior year (2021: loss of GBP9.2m). This was a result of the
positive trading result offset by the increased depreciation on
right-of-use assets and amortisation of intangibles following the
launch of Ectosan(R) Vet/CleanTreat(R) and SPR shrimp, as well as
higher net finance costs as discussed above.
Taxation
There was a tax charge on the loss for the year of GBP7.3m
(2021: GBP2.4m), mainly due to overseas tax charges in Genetics and
Advanced Nutrition in territories where no loss relief is
available, partially offset by deferred tax credits on intangible
assets mainly arising on consolidation from acquisitions.
Other Comprehensive Income
In addition to the loss for the year of GBP30.5m, a significant
item to be reclassified to the income statement related to foreign
exchange translation differences. The gain on this account was
GBP47.2m. This gain was driven by a strong USD impacting two main
items, firstly the retranslation of the foreign currency
denominated subsidiary balance sheets in GBP at the year end of
GBP36.3m and the foreign exchange of GBP10.9m associated with items
which are designated as net investment hedges or internal loans
which are deemed to be equity and as such the exchange associated
with these goes directly to other comprehensive Income.
Reported loss for the year
The loss for the year was GBP30.5m (2021: loss of GBP11.6m).
Earnings per share
Basic loss and diluted loss per share were both 4.60p (2021:
loss per share 1.93p). 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 28m.
Dividends
No dividends have been paid or proposed in either 2022 or 2021
and the Board is not recommending a final dividend in respect of
the year ended 30 September 2022.
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 2022, the carrying value of biological assets was
GBP46.7m (2021: GBP38.4m). This increase is due principally to the
increase in the biomass of broodstock as we continue to expand
production at Salten and Chile and increased eggs available for
sale in FY23. The fair value uplift on biological assets included
in cost of goods for the year was GBP1.6m (2021: GBP3.3m).
Intangibles
Additions to intangibles were GBP1.9m (2021: GBP5.0m) with the
main area of investment being capitalised development costs which
in the year decreased by GBP3.1m to GBP1.7m (2021: GBP4.8m).
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) (GBP0.6m)
-- SPR shrimp (GBP1.0m)
-- Patents for genetics (GBP0.2m)
-- Live food alternative diets (GBP0.1m)
Capital expenditure
During 2021, we invested in a number of growth initiatives and
in 2022 there remained some spend to complete them. The Group
incurred tangible fixed asset additions of GBP10.8m (2021:
GBP18.0m) broken down as follows:
-- Health: GBP2.6m
-- Genetics: GBP5.6m
-- Nutrition: GBP2.6m
Within Health, there was an investment in a third CleanTreat(R)
unit and finalising the mobilisation of the second vessel on which
the second CleanTreat(R) units are situated. During the year, this
third CleanTreat(R) unit was reclassified to inventory as it is
intended to be used in the new business model whereby the units are
sold to customers rather than owned by us. Capex associated with
our Genetics business was GBP5.6m where we finished the new
incubation house for our Icelandic facility (GBP2.3m) and commenced
building new tanks at Salten to support ramping up to the 150
million egg capacity at that facility which will continue in FY23
(GBP1.2m) and we continue to invest in our other growth initiatives
SPR Shrimp and Tilapia in the US. In Nutrition we continued to
invest in the two manufacturing facilities to support continued
growth.
Cash flow, liquidity and net debt
Movement in net debt GBPm
Net debt at 30 September 2021 (80.9)
======
Cash generated from operations excluding working capital and
taxes paid 30.3
======
Movement in working capital (12.0)
------------------------------------------------------------- ======
Capital expenditure (12.7)
======
Other investing activities (0.2)
======
Foreign exchange on cash and debt 10.5
======
Interest and tax (17.0)
======
Proceeds from previous year disposals of subsidiaries 1.5
======
New leases (IFRS 16) (11.5)
======
Shares issued 20.2
======
Other non-cash movements (1.9)
======
Net debt at 30 September 2022 (73.7)
======
Cash flow
With improved trading in all business areas, we saw strong cash
generated from operations of GBP30.3m (2021: GBP22m). This also
drove higher working capital levels and taxes, leading to net cash
flows generated from operating activities of GBP10.8m (2021:
GBP5.8m). Capital expenditure, both intangible and tangible, showed
a significant decrease of GBP10.0m to GBP12.7m (2021: GBP22.7m) as
we worked to moderate our capex and finished off the investment in
some of the growth initiatives, primarily the incubation house in
Iceland.
Working capital
Working capital has grown in the period driven by a number of
factors. As the dollar strengthened, we can see the impact on the
balance sheet as noted above in the other comprehensive income
section and this increased the working capital balances at 30
September 2022, but working capital did grow during FY2022.
We noted earlier the increase in biological assets within the
genetics areas. Other Inventories grew in Nutrition as we had more
GSL Artemia in inventory than previous years to ensure it was
available in all locations.
In Health, we had transferred the CleanTreat(R) equipment into
Inventory resulting in Health inventory increasing by GBP3.4m.
Trade Debtors and creditors, of course, increased as a result of
increased sales but trade debtors only increased slightly as a % of
sales from 19% to 20% in the year. Similarly, trade payables were
only slightly higher than last year.
A significant amount of cash is tied up with the working capital
of the group and focus continued to be on releasing that investment
in the years to come.
Refinancing and borrowing facilities
The Group had a NOK 850m senior secured floating rate listed
bond which was due to mature 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
was due to mature in December 2022 and had GBP4m drawn at 30
September 2022. The interest rate on the facility is between 3% and
3.5% above LIBOR depending on leverage.
The Company successfully completed a new senior unsecured green
bond issue of NOK 750 million, with an expected maturity date of 27
September 2025. The bond has a coupon of three months NIBOR* + 6.5%
p.a. with quarterly interest payments.
There are other borrowing facilities held within Benchmark
Genetics Salten AS which were put in place to fund the building of
the Salten salmon eggs facility totalling NOK 227.5m (GBP18.8m)
(2021: NOK 246m (GBP20.9m)), 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 NOK 20.0m (renewal
annual in March) and an overdraft of NOK 17.5m (maturity December
2022) were in place for use solely by Benchmark Genetics Salten AS.
These facilities are undrawn (2021: undrawn).
Subsequent Events
Subsequent to the year end, on 21 November 2022, the company
successfully refinanced the RCF facility with a new facility of
GBP20m. The interest rate on the new RCF was between 2.5% and 3.25%
with a maturity of June 2025. In addition, the term loan facility
outstanding balance and the overdraft facility provided by Nordea
were refinanced into one facility on 1 November 2022 totalling
NOK179.5m with a maturity date of January 2028. The margin on the
new facility is 2.5%.
Cash and total debt
GBPm
Net debt 2022 2021
------ ------
Cash 36.4 39.5
====== ======
NOK 750m bond (2021: NOK 850m) (61.1) (75.5)
====== ======
Other borrowings (22.8) (20.9)
====== ======
Lease liabilities (26.2) (24.0)
====== ======
Net debt (73.7) (80.9)
====== ======
The RCF facility combined with the year-end cash balance of
GBP36.4m (2021: GBP39.5m) means the Group had total liquidity of
GBP45.8m (2021: GBP50.6m). This, while 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.
Equity raise
In November 2021, GBP20m net proceeds were raised through a
placing to provide the Company with additional headroom to maintain
this momentum and to continue to fund its ongoing growth
initiatives.
Oslo listing
During FY2021, 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. As a result the company continues to progress towards a
listing on Euronext Growth Oslo by the end of calendar year 2022.
As previously announced the Company intends to uplist to the Oslo
Børs, the leading seafood and aquaculture market globally, in H1 of
calendar year 2023. The timing of both the listing on Euronext
Growth Oslo and intended uplist to the Oslo Børs is subject to
market conditions.
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
2022 is GBP45.8m (2021: GBP50.6m). The equity ratio, defined as
'the ratio of Book Equity to Total Assets' must always exceed 40%.
The equity ratio at 30 September 2022 was 61% (2021: 58%). In
addition, an equity to asset ratio covenant exists for the
Benchmark Genetics Salten AS debt with a target threshold of 40%,
this equity to asset ratio was 51.3% at 30 September 2022 (2021:
46.2%).
Going concern
As at 30 September 2022 the Group had net assets of GBP323.3m
(2021: GBP279.6m), including cash of GBP36.4m (2021: GBP39.5m) as
set out in the Consolidated Balance Sheet. The Group made a loss
for the year of GBP30.5m (2021: GBP11.6m). As at 30 September 2022
the Company had net assets of GBP346.6m (2021: GBP336.2m),
including cash of GBP3.2m (2021: GBP9.0m) as set out on the Company
Balance Sheet. The Company made a loss for the year of GBP16.5m
(2021: GBP3.9m).
As noted in the Strategic Report, we have seen a year of strong
performance following an extended period impacted by COVID-19, with
improvements throughout the year in all of our three business
areas. The Directors have reviewed forecasts and cash flow
projections for a period of at least 12 months 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 analysis performed, the Directors considered
severe but plausible scenarios on the Group's trading and cash flow
forecasts, firstly in relation to continued roll out of the
Ectosan(R)Vet and CleanTreat offering. Sensitivities considered
included modelling slower ramp up of the commercialisation of
Ectosan(R) Vet and CleanTreat(R) through delayed roll-out of the
revised operating model for the service, together with reductions
in expected biomass treated and reduced treatment prices. Key
downside sensitivities modelled in other areas included assumptions
on slower commercialisation of SPR shrimp, slower salmon egg sales
growth both in Chile and to land-based farms in Genetics, along
with sensitivities on sales price increases and potential supply
constraints on CIS artemia in Advanced Nutrition. Mitigating
measures within the control of management have been identified
should they be required in response to these sensitivities,
including reductions in areas of discretionary spend, deferral of
capital projects and temporary hold on R&D for non-imminent
products.
The year ended with the successful refinancing of its NOK 850
million bond which was due to mature in June 2023 with the issue of
a NOK 750 million unsecured green bond maturing in 2025. This was
achieved against a backdrop of challenging macroeconomic and market
conditions and places the Group in a much stronger position in
light of the ongoing market environment. Additionally, following
the year end, the USD15m RCF was refinanced by a new GBP20m RCF on
21 November 2022 with a June 2025 maturity. Furthermore, our NOK
216m loan facility (which had NOK 165.6m outstanding at the year
end) which was set to mature in October 2023 was combined with our
NOK 17.5m overdraft facility into a new loan facility of NOK 179.5m
on 1 November 2022, with a new maturity date in a further 5 years
no later than 15 January 2028. Following all of these refinancing
transactions, the Directors are satisfied there are sufficient
facilities in place during the assessment period.
The global economic environment has recently experienced
turbulence largely as a result of the conflict in Eastern Europe
with supply issues in a number of industries impacted and inflation
at high levels. Against this backdrop, the Group shows resilience
against these pressures in its forecasts, with financial
instruments in place to fix interest rates and with opportunities
available to mitigate globally high inflation rates, such that even
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. The Directors therefore remain confident that the Group
has adequate resources to continue to meet its liabilities as and
when they fall due within the period of 12 months from the date of
approval of these financial statements. Based on their assessment,
the Directors believe it remains appropriate to prepare the
financial statements on a going concern basis.
Consolidated Income Statement
for the year ended 30 September 2022
Notes 2022 2021
GBP000 GBP000
================================================ ===== ================== ==================
Revenue 158,277 125,062
Cost of sales (75,149) (59,477)
================================================ ===== ================== ==================
Gross profit 83,128 65,585
Research and development costs (6,691) (7,010)
Other operating costs (44,661) (38,221)
Share of loss of equity-accounted investees,
net of tax (595) (905)
================================================ ===== ================== ==================
Adjusted EBITDA(2) 31,181 19,449
Exceptional - restructuring/acquisition-related
items 4 16 (184)
================================================ ===== ================== ==================
EBITDA(1) 31,197 19,265
Depreciation and impairment (19,897) (8,359)
Amortisation and impairment (19,161) (16,283)
================================================ ===== ================== ==================
Operating loss (7,861) (5,377)
Finance cost 3 (20,057) (7,987)
Finance income 3 4,741 4,185
================================================ ===== ================== ==================
Loss before taxation (23,177) (9,179)
Tax on loss (7,274) (2,397)
================================================ ===== ================== ==================
Loss for the year (30,451) (11,576)
================================================ ===== ================== ==================
(Loss)/profit for the year attributable
to:
- Owners of the parent (32,087) (12,891)
- Non-controlling interest 1,636 1,315
================================================ ===== ================== ==================
(30,451) (11,576)
================================================ ===== ================== ==================
Earnings per share
Basic loss per share (pence) 5 (4.60) (1.93)
Diluted loss per share (pence) 5 (4.60) (1.93)
================================================ ===== ================== ==================
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 2022
2022 2021
GBP000 GBP000
====================================================== ================== ==================
Loss for the year (30,451) (11,576)
Other comprehensive income
Items that are or may be reclassified subsequently to
profit or loss
Foreign exchange translation differences 47,606 (9,929)
Cash flow hedges - changes in fair value 2,627 3,054
Cash flow hedges - reclassified to profit or loss 2,546 709
====================================================== ================== ==================
Total comprehensive income for the year 22,328 (17,742)
====================================================== ================== ==================
Total comprehensive income for the year attributable
to:
- Owners of the parent 20,326 (19,329)
- Non-controlling interest 2,002 1,587
====================================================== ================== ==================
22,328 (17,742)
====================================================== ================== ==================
Consolidated Balance Sheet
as at 30 September 2022
Notes 2022 2021
GBP000 GBP000
============================================ ===== ================== ==================
Assets
Property, plant and equipment 6 81,900 78,780
Right-of-use assets 7 27,034 25,531
Intangible assets 8 245,264 229,040
Equity-accounted investees 3,113 3,354
Other investments 15 15
Biological and agricultural assets 10 20,878 21,244
============================================ ===== ================== ==================
Non-current assets 378,204 357,964
============================================ ===== ================== ==================
Inventories 29,813 20,947
Biological and agricultural assets 10 25,780 17,121
Trade and other receivables 11 56,377 46,498
Cash and cash equivalents 36,399 39,460
============================================ ===== ================== ==================
Current assets 148,369 124,026
============================================ ===== ================== ==================
Total assets 526,573 481,990
============================================ ===== ================== ==================
Liabilities
Trade and other payables 12 (44,324) (46,668)
Loans and borrowings 13 (17,091) (10,654)
Corporation tax liability (10,211) (5,634)
Provisions (1,631) (563)
============================================ ===== ================== ==================
Current liabilities (73,257) (63,519)
============================================ ===== ================== ==================
Loans and borrowings 13 (93,045) (109,737)
Other payables 12 (8,996) (911)
Deferred tax (27,990) (28,224)
============================================ ===== ================== ==================
Non-current liabilities (130,031) (138,872)
============================================ ===== ================== ==================
Total liabilities (203,288) (202,391)
============================================ ===== ================== ==================
Net assets 323,285 279,599
============================================ ===== ================== ==================
Issued capital and reserves attributable
to owners of the parent
Share capital 704 670
Additional paid-in capital 420,824 400,682
Capital redemption reserve 5 5
Retained earnings (185,136) (154,231)
Hedging reserve (703) (5,876)
Foreign exchange reserve 77,705 30,465
============================================ ===== ================== ==================
Equity attributable to owners of the parent 313,399 271,715
Non-controlling interest 9,886 7,884
============================================ ===== ================== ==================
Total equity and reserves 323,285 279,599
============================================ ===== ================== ==================
The financial statements were approved and authorised for issue
by the Board of Directors on 30 November 2022 and were signed on
its behalf by:
Septima Maguire
Chief Financial Officer
Company number: 04115910
Consolidated Statement of Changes in Equity
for the year ended 30 September 2022
Total
Additional attributable
paid-in to equity
Share share Other Hedging Retained holders Non-controlling Total
capital capital* reserves reserve earnings of parent interest equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
====================== ======== ========== ========= ======== ========= ============= =============== ========
As at 1 October 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
year - - - - (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
----------------------
Comprehensive income
for the year
(Loss)/profit for the
year - - - - (32,087) (32,087) 1,636 (30,451)
Other comprehensive
income - - 47,240 5,173 - 52,413 366 52,779
---------------------- ======== ========== ========= ======== ========= ============= =============== ========
Total comprehensive
income for the year - - 47,240 5,173 (32,087) 20,326 2,002 22,328
====================== ======== ========== ========= ======== ========= ============= =============== ========
Contributions by and
distributions to
owners
Share issue 34 20,704 - - - 20,738 - 20,738
Share issue costs
recognised
through entity - (562) - - - (562) - (562)
Share-based payment - - - - 1,182 1,182 - 1,182
====================== ======== ========== ========= ======== ========= ============= =============== ========
Total contributions
by and distributions
to owners 34 20,142 - - 1,182 21,358 - 21,358
====================== ======== ========== ========= ======== ========= ============= =============== ========
Changes in ownership
====================== ======== ========== ========= ======== ========= ============= =============== ========
Total changes in - - - - - - - -
ownership
interests
====================== ======== ========== ========= ======== ========= ============= =============== ========
Total transactions
with
owners of the Company 34 20,142 - - 1,182 21,358 - 21,358
====================== ======== ========== ========= ======== ========= ============= =============== ========
As at 30 September
2022 704 420,824 77,710 (703) (185,136) 313,399 9,886 323,285
====================== ======== ========== ========= ======== ========= ============= =============== ========
Consolidated Statement of Cash Flows
for the year ended 30 September 2022
Notes 2022 2021
GBP000 GBP000
=================================================== ===== ================= =================
Cash flows from operating activities
Loss for the year (30,451) (11,576)
Adjustments for:
Depreciation and impairment of property, plant
and equipment 8,602 5,017
Depreciation and impairment of right-of-use assets 11,295 3,342
Amortisation and impairment of intangible fixed
assets 19,161 16,283
(Profit)/loss on sale of property, plant and
equipment (43) 46
Finance income 3 (319) (1,442)
Finance costs 3 18,437 7,987
Increase in fair value of contingent consideration
receivable (1,203) -
Share of loss of equity-accounted investees,
net of tax 595 905
Foreign exchange losses/(gains) (3,985) (1,800)
Share-based payment expense 1,182 830
Other adjustments for non-cash items (276) -
Tax expense 7,274 2,397
Increase in trade and other receivables (8,511) (8,178)
Increase in inventories (5,406) (3,554)
Increase in biological and agricultural assets (6,099) (5,427)
Increase in trade and other payables 6,946 5,547
Increase in provisions 1,058 -
=================================================== ===== ================= =================
18,257 10,377
Income taxes paid (7,447) (4,587)
=================================================== ===== ================= =================
Net cash flows generated from operating activities 10,810 5,790
=================================================== ===== ================= =================
Investing activities
Purchases of investments (378) (578)
Receipts from disposal of investments 1,544 9
Purchases of property, plant and equipment (10,808) (17,683)
Purchases of intangibles (205) (225)
Capitalised research and development costs (1,708) (4,813)
Proceeds from sale of fixed assets 220 112
Interest received 119 88
=================================================== ===== ================= =================
Net cash flows used in investing activities (11,216) (23,090)
=================================================== ===== ================= =================
Financing activities
Proceeds of share issues 20,737 750
Share-issue costs recognised through equity (562) -
Acquisition of NCI - (12)
Proceeds from bank or other borrowings (net of
borrowing fees) 67,939 -
Repayment of bank or other borrowings (74,874) (3,106)
Interest and finance charges paid (9,629) (7,699)
Repayments of lease liabilities (10,533) (4,602)
=================================================== ===== ================= =================
Net cash flows used in from financing activities (6,922) (14,669)
=================================================== ===== ================= =================
Net decrease in cash and cash equivalents (7,328) (31,969)
Cash and cash equivalents at beginning of year 39,460 71,605
Effect of movements in exchange rate 4,267 (176)
=================================================== ===== ================= =================
Cash and cash equivalents at end of year 36,399 39,460
=================================================== ===== ================= =================
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 2022. Those policies have been consistently applied to
all the years presented unless otherwise stated.
These Group and parent company financial statements were
prepared and approved by the Directors in accordance with UK-
adopted International Accounting Standards in conformity with the
requirements of the Companies Act 2006 as it applies to companies
reporting under those standards ("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 2022
or 2021 but is derived from those accounts. Statutory accounts for
2021 have been delivered to the registrar of companies, and those
for 2022 will be delivered in due course. The auditor has reported
on those accounts. The auditor's report for 2022 was (i)
unqualified and (ii) did not contain a statement under section
498(2) or (3) of the Companies Act 2006. Their report for the
accounts of 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.
The financial statements are prepared on the historical cost
basis except that the following assets and liabilities are stated
at their fair value: certain financial assets and financial
liabilities (including contingent consideration receivable and
derivatives) and biological assets measured at fair value.
Non-current assets and disposal groups held for sale are stated at
the lower of previous carrying amount and fair value less costs to
sell.
Going concern
As at 30 September 2022 the Group had net assets of GBP323.3m
(2021: GBP279.6m), including cash of GBP36.4m (2021: GBP39.5m) as
set out in the Consolidated Balance Sheet. The Group made a loss
for the year of GBP30.5m (2021: GBP11.6m). As at 30 September 2022
the Company had net assets of GBP346.6m (2021: GBP336.2m),
including cash of GBP3.2m (2021: GBP9.0m) as set out on the Company
Balance Sheet. The Company made a loss for the year of GBP16.5m
(2021: GBP3.9m).
As noted in the Strategic Report, we have seen a year of strong
performance following an extended period impacted by COVID-19, with
improvements throughout the year in all of our three business
areas. The Directors have reviewed forecasts and cash flow
projections for a period of at least 12 months 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 analysis performed, the Directors considered
severe but plausible scenarios on the Group's trading and cash flow
forecasts, firstly in relation to continued roll out of the
Ectosan(R) Vet and CleanTreat(R) offering. Sensitivities considered
included modelling slower ramp up of the commercialisation of
Ectosan(R) Vet and CleanTreat(R) through delayed roll-out of the
revised operating model for the service, together with reductions
in expected biomass treated and reduced treatment prices. Key
downside sensitivities modelled in other areas included assumptions
on slower commercialisation of SPR shrimp, slower salmon egg sales
growth both in Chile and to land-based farms in Genetics, along
with sensitivities on sales price increases and potential supply
constraints on CIS artemia in Advanced Nutrition. Mitigating
measures within the control of management have been identified
should they be required in response to these sensitivities,
including reductions in areas of discretionary spend, deferral of
capital projects and temporary hold on R&D for non-imminent
products.
The year ended with the successful refinancing of its NOK 850
million bond which was due to mature in June 2023 with the issue of
a NOK 750 million unsecured green bond maturing in 2025. This was
achieved against a backdrop of challenging macroeconomic and market
conditions and places the Group in a much stronger position in
light of the ongoing market environment. Additionally, following
the year end, the USD15m RCF was refinanced with the agreement of a
new GBP20m RCF on 21 November 2022 with a maturity of June 2025.
Furthermore, our NOK 216m loan facility (which had NOK 165.6m
outstanding at the year end) which was set to mature in October
2023 was combined with our NOK 17.5m overdraft facility into a new
loan facility of NOK 179.5m on 1 November 2022, with a new maturity
date in a further 5 years no later than 15 January 2028. Following
all of these refinancing transactions, the Directors are satisfied
there are sufficient facilities in place during the assessment
period.
The global economic environment has recently experienced
turbulence largely as a result of the conflict in Eastern Europe
with supply issues in a number of industries impacted and inflation
at high levels. Against this backdrop, the Group shows resilience
against these pressures in its forecasts, with financial
instruments in place to fix interest rates and with opportunities
available to mitigate globally high inflation rates, such that even
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.
The Directors therefore remain confident that the Group has
adequate resources to continue to meet its liabilities as and when
they fall due within the period of 12 months from the date of
approval of these financial statements. Based on their assessment,
the Directors believe it remains appropriate to prepare the
financial statements on a going concern basis.
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 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.
Inter-
Advanced segment
Year ended 30 September 2022 Genetics Nutrition Health Corporate sales Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
======================================== ========== =========== ======== =========== ======== ========
Revenue 58,008 80,286 20,135 5,120 (5,272) 158,277
Cost of sales (25,971) (37,733) (11,544) 4 95 (75,149)
======================================== ========== =========== ======== =========== ======== ========
Gross profit/ (loss) 32,037 42,553 8,591 5,124 (5,177) 83,128
Research and development costs (4,329) (1,990) (372) - - (6,691)
Operating costs (11,133) (21,546) (8,111) (9,048) 5,177 (44,661)
Share of profit of equity-accounted
investees, net of tax (595) - - - - (595)
======================================== ========== =========== ======== =========== ======== ========
Adjusted EBITDA 15,980 19,017 108 (3,924) - 31,181
Exceptional - restructuring/acquisition
related items - (220) 18 218 - 16
======================================== ========== =========== ======== =========== ======== ========
EBITDA 15,980 18,797 126 (3,706) - 31,197
Depreciation and impairment (5,322) (2,236) (12,251) (88) - (19,897)
Amortisation and impairment (1,695) (15,000) (2,463) (3) - (19,161)
======================================== ========== =========== ======== =========== ======== ========
Operating profit/(loss) 8,963 1,561 (14,588) (3,797) - (7,861)
Finance cost (20,057)
Finance income 4,741
======================================== ========== =========== ======== =========== ======== ========
Loss before tax (23,177)
======================================== ========== =========== ======== =========== ======== ========
Advanced Inter-segment
Genetics Nutrition Health Corporate sales Total
Year ended 30 September 2021 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)
------------------------------------------------ -------- ---------- ------- --------- ------------- --------
Non-current assets by location of assets
2022 2021
GBP000 GBP000
--------------- ------- -------
Belgium 173,135 156,998
Norway 83,752 86,545
UK 42,373 44,629
Iceland 39,448 35,062
Rest of Europe 953 1,062
Rest of world 38,543 33,668
--------------- ------- -------
378,204 357,964
=============== ======= =======
3. Net finance costs
2022 2021
GBP000 GBP000
========================================================== ======== =======
Interest received on bank deposits 319 88
Foreign exchange gains on financing activities 4,422 786
Foreign exchange gains on operating activities - 1,957
Cash flow hedges - reclassified from OCI - (709)
Cash flow hedges - ineffective portion of changes in fair
value - 2,063
========================================================== ======== =======
Finance income 4,741 4,185
========================================================== ======== =======
Finance leases (interest portion) (1,744) (1,076)
Cash flow hedges - reclassified from OCI (2,546) -
Cash flow hedges - ineffective portion of changes in fair
value (4,475) -
Foreign exchange losses on operating activities (1,620) -
Interest expense on financial liabilities measured at
amortised cost (9,672) (6,911)
========================================================== ======== =======
Finance costs (20,057) (7,987)
========================================================== ======== =======
Net finance costs recognised in profit or loss (15,316) (3,802)
========================================================== ======== =======
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.
2022 2021
GBP000 GBP000
================================ ======= =======
Acquisition-related items - (850)
Exceptional restructuring costs 1,229 480
Cost in relation to disposals (1,245) 554
================================ ======= =======
Total exceptional items (16) 184
-------------------------------- ------- -------
Acquisition-related items are costs incurred in investigating
and acquiring new businesses. In 2021 contingent consideration
of
GBP850,000 was released in relation to the purchase of Benchmark
Genetics (USA) Inc.
Exceptional costs include: GBP843,000 (2021: GBPnil) of legal
and professional costs in relation to preparing for listing the
Group on the Oslo stock exchange, and GBP276,000 (2021: GBP480,000)
relating to restructuring costs.
Costs in relation to disposals includes a credit of GBP1,203,000
(2021: GBPnil) in relation to additional contingent consideration
received and receivable from disposals in previous years
(GBP294,000 relating to the disposal of Aquaculture UK on 7
February 2020, and GBP909,000 relating to the disposal of Improve
International Limited and its subsidiaries on 23 June 2020)
together with legal fees, lease costs and disposal items (net of
proceeds received) totalling GBP42,000 relating to additional costs
and disposals proceeds relating to disposals that occurred in
2020.
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.
2022 2021
=========================================================== ======== ========
Loss attributable to equity holders of the parent (GBP000) (32,087) (12,891)
Weighted average number of shares in issue (thousands) 698,233 669,459
Basic loss per share (pence) (4.60) (1.93)
=========================================================== ======== ========
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.
A total of 6,240,304 potential ordinary shares have not been
included within the calculation of statutory diluted loss per share
for the year (2021: 4,615,712) as they are anti-dilutive and reduce
the loss per share. However, these potential ordinary shares could
dilute earnings per share in the future.
6. Property, plant and equipment
Group
Assets Long-Term
Freehold in the Leasehold Office
Land and course Property Plant Equipment
Buildings of construction Improvements and Machinery and Fixtures Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
================================= ========== ================ ============= ============== ============= =======
Cost
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
--------------------------------- ---------- ---------------- ------------- -------------- ------------- -------
Balance at 1 October 2021 63,027 1,807 6,421 32,893 2,751 106,899
Additions 4,025 1,616 283 4,546 338 10,808
Re-classification to inventory - - - (1,514) - (1,514)
Increase/(decrease) through
transfers
from assets in the course of
construction 251 (1,275) - 995 29 -
Exchange differences 1,924 116 432 2,377 146 4,995
Disposals (224) - - (131) (126) (481)
================================= ========== ================ ============= ============== ============= =======
Balance at 30 September 2022 69,003 2,264 7,136 39,166 3,138 120,707
--------------------------------- ---------- ---------------- ------------- -------------- ------------- -------
Accumulated depreciation
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
--------------------------------- ---------- ---------------- ------------- -------------- ------------- -------
Balance at 1 October 2022 7,829 - 4,723 14,806 761 28,119
Depreciation charge for the year 2,387 - 197 5,411 607 8,602
Exchange differences 792 - 256 1,200 141 2,389
Disposals (84) - - (102) (117) (303)
--------------------------------- ---------- ---------------- ------------- -------------- ------------- -------
Balance at 30 September 2022 10,924 - 5,176 21,315 1,392 38,807
--------------------------------- ---------- ---------------- ------------- -------------- ------------- -------
Net book value
================================= ========== ================ ============= ============== ============= =======
At 30 September 2022 58,079 2,264 1,960 17,851 1,746 81,900
================================= ========== ================ ============= ============== ============= =======
At 30 September 2021 55,198 1,807 1,698 18,087 1,990 78,780
================================= ========== ================ ============= ============== ============= =======
At 1 October 2020 51,375 1,213 983 10,480 1,550 65.601
--------------------------------- ---------- ---------------- ------------- -------------- ------------- -------
7. Leases
Group
2022 2021
Right-of-use assets GBP000 GBP000
============================== ======= =======
Leasehold property 9,389 9,859
Plant and machinery 17,582 15,541
Office equipment and fixtures 63 131
============================== ======= =======
27,034 25,531
------------------------------ ------- -------
2022 2021
Lease liabilities GBP000 GBP000
============================== ======= =======
Current 11,522 9,042
Non-current 14,765 14,945
============================== ======= =======
26,287 23,987
------------------------------ ------- -------
2021 2020
Depreciation charge of right-of-use assets GBP000 GBP000
==================================================== ======= =======
Leasehold property 1,383 1,450
Plant and machinery 9,176 1,718
Office equipment and fixtures 72 74
==================================================== ======= =======
10,631 3,242
==================================================== ======= =======
2021 2020
Additional information GBP000 GBP000
==================================================== ======= =======
Additions to right-of-use assets 497 18,721
Modifications to right-of-use assets 10,884 -
Impairment of leasehold property right-of-use asset 664 100
Interest expense 1,744 1,076
Expense relating to short-term leases 152 371
Expense relating to leases of low-value leases 151 58
Total cash outflow for leases 10,533 6,107
---------------------------------------------------- ------- -------
Benchmark Animal Health Limited modified the existing leases for
two PSV vessels, the FS Aquarius and the FS Pegasus to extend the
lease term only. These two assets constitute GBP15,741,399 of the
net book value and GBP15,358,543 of the lease liability at the year
end.
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
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
------------- -------- -------- ---------- ------------ -------- --------- -------- -------- ----------- --------
Balance at 1
October
2021 319 140,055 338 133,201 5,271 6,602 34,479 22,636 27,579 370,480
Additions -
externally
acquired 94 - 111 - - - - - - 205
Additions -
internally
developed - - - - - - - - 1,708 1,708
Exchange
differences 34 24,619 3 27,206 1,107 (27) 5,841 599 1,935 61,317
============= ======== ======== ========== ============ ======== ========= ======== ======== =========== ========
Balance at
30 September
2022 447 164,674 452 160,407 6,378 6,575 40,320 23,235 31,222 433,710
------------- -------- -------- ---------- ------------ -------- --------- -------- -------- ----------- --------
Accumulated
amortisation
and
impairment
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
------------- -------- -------- ---------- ------------ -------- --------- -------- -------- ----------- --------
Balance at 1
October
2021 67 41,358 133 73,541 1,166 6,210 13,077 4,111 1,777 141,440
Amortisation
charge
for the
period 67 - 70 13,574 215 102 2027 636 2,165 18,856
Impairment - - - 305 - - - - - 305
Exchange
differences 9 8,592 3 16,966 275 (19) 1,839 139 41 27,845
============= ======== ======== ========== ============ ======== ========= ======== ======== =========== ========
Balance at 30
September
2022 143 49,950 206 104,386 1,656 6,293 16,943 4,886 3,983 188,446
------------- -------- -------- ---------- ------------ -------- --------- -------- -------- ----------- --------
Net book
value
At 30
September
2022 304 114,724 246 56,021 4,722 282 23,377 18,349 27,239 245,264
============= ======== ======== ========== ============ ======== ========= ======== ======== =========== ========
At 30
September
2021 252 98,697 205 59,660 4,105 392 21,402 18,525 25,802 229,040
============= ======== ======== ========== ============ ======== ========= ======== ======== =========== ========
At 1 October
2020 175 101,245 189 75,555 4,492 447 24,183 18,751 21,966 247,003
------------- -------- -------- ---------- ------------ -------- --------- -------- -------- ----------- --------
The table below provides further detail of intangibles and their
remaining amortisation period.
Net book Net book Remaining
value value life
Description Category 2022 2021 2022
============================================= =============== ======== ======== ===========
Acquisition of INVE in 2015
Goodwill Goodwill 87,585 72,385 -
Harvesting rights Licences 22,449 19,599 13
Intellectual
Product technology property 446 1,843 0
Intellectual
Product rights property 39,390 42,571 3
Intellectual
Brand names property 12,976 11,533 13
Intellectual
In-process R&D property 847 915 3
Customer relationships Customer lists 4,723 4,105 19
============================================= =============== ======== ======== ===========
Total relating to acquisition of INVE 168,416 152,951
============================================================== ======== ======== ===========
Acquisition of Salmobreed AS (Now part
of Benchmark Genetics Norway AS) in
2014
Goodwill Goodwill 6,523 6,703 -
Genetic material and breeding nuclei Genetics 9,911 10,500 32
============================================= =============== ======== ======== ===========
Total relating to acquisition of Salmobreed
AS 16,434 17,203
============================================================== ======== ======== ===========
Acquisition of Stofnfiskur (now Benchmark
Genetics Iceland) in 2014
--------------------------------------------- --------------- -------- -------- -----------
Goodwill Goodwill 12,467 11,394 -
--------------------------------------------- --------------- -------- -------- -----------
Genetic material and breeding nuclei Genetics 8,147 7,677 32
============================================= =============== ======== ======== ===========
Total relating to acquisition of Stofnfiskur 20,614 19,071
============================================================== ======== ======== ===========
Acquisition of Akvaforsk Genetics Center
AS (Now part of Benchmark Genetics Norway
AS) in 2015
Goodwill Goodwill 7,348 7,552 -
Licences Licences 292 662 1
Contracts Contracts 282 392 3
============================================= =============== ======== ======== ===========
Total relating to acquisition of Akvaforsk
Genetics Center AS 7,922 8,606
============================================================== ======== ======== ===========
Capitalised development costs
Development
Ectosan(R) Vet/CleanTreat(R) costs 15,840 17,621 9
Not yet
Development ready for
Live food alternative diets costs 4,115 3,318 use
Not yet
Development ready for
SPR shrimp costs 6,686 4,863 use
============================================= =============== ======== ======== ===========
Total capitalised development costs 26,641 25,802
============================================================== ======== ======== ===========
Other purchased material intangible Intellectual
assets property 1,497 1,586 17
============================================= =============== ======== ======== ===========
Total relating to other purchased intangible
assets 1,497 1,586
============================================================== ======== ======== ===========
Other individually immaterial goodwill
and intangible assets 3,740 3,821
============================================================== ======== ======== ===========
Total net book value at 30 September 245,264 229,040
============================================================== ======== ======== ===========
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 cash generating units (CGUs) that are
expected to benefit from the business combination. The only
intangible assets not yet ready for use are generally the
capitalised development costs on internally developed products.
Following the commercial launch of the SPR Shrimp product in
Genetics, amortisation of these development costs commenced during
the year. The development costs included in the table below
represents only those that are not yet ready for use.
Due to the interdependence of the operations within each of the
business areas and the way in which they are managed, management
have determined the CGUs are the business areas themselves -
Health, Genetics and Advanced Nutrition. These are the smallest
groups of assets that independently generate cashflows and whose
cashflows are largely independent of those generated by other
assets. Goodwill and capitalised development costs arise across the
Group, and are allocated specifically against the CGUs as
follows:
Advanced
Genetics Nutrition Health Total
2022 2022 2022 2022
GBP000 GBP000 GBP000 GBP000
========================================== ======== ========== ======= =======
Benchmark Genetics Norway AS 6,523 - - 6,523
Benchmark Genetics Iceland HF (Previously
Stofnfiskur HF) 12,467 - - 12,467
Akvaforsk Genetic Center* 8,150 - - 8,150
INVE Aquaculture Group - 87,585 - 87,585
Goodwill 27,140 87,585 - 114,725
------------------------------------------ -------- ---------- ------- -------
Other intangibles not yet ready for use
- development costs - 4,115 - 4,115
------------------------------------------ -------- ---------- ------- -------
* 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
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).
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. Forecasts also include any costs in
relation to the Group's climate change strategy and climate change
factors have been considered when setting the long-term growth
rates.
The values assigned to the key assumptions represent
management's assessment of future trends in the relevant industries
and have been based on historical data from both external and
internal sources.
Specific assumptions used are as follows:
Genetics
Amortisation of the development costs relating to the business
area's new SPR Shrimp product commenced in the period.
The pre-tax cashflows from the five-year projections were
discounted using a pre-tax discount rate of 14.7% (2021: 10.9%).
CAGR of revenue of 15% (2021: 14%) is implied by the five-year plan
and a long-term growth rate of 2.5% (2021: 2.5%) has been used to
extrapolate the terminal year cashflow 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.
Advanced Nutrition
The pre-tax cashflows from the five-year projections were
discounted using a pre-tax discount rate of 15.6% (2021: 10.3%).
CAGR of revenue of 10% (2021: 6%) is implied by the five-year plan
and a long-term growth rate of 3.5% (2021: 3.5%) has been used to
extrapolate the terminal year cashflow into perpetuity. Market
analysis reports predict long-term growth rates of c5.0%, and the
health benefits of shrimp are still very much in evidence.
Management have used a long-term growth rate of 3.5% to represent
both a prudent and consistent approach for the CGU.
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 1.8% or an increase in the pre-tax
discount rate to 16.8%, either of which are considered to be
reasonably possible, would reduce the headroom on the Advanced
Animal Nutrition CGU of GBP21.6m to nil.
Should the discount rate increase further than this, then an
impairment of the goodwill or development costs would be
likely.
In the work done during the year in assessing the risks caused
by climate change, there is a risk associated with the water levels
in the Great Salt Lake which is a key source of artemia for the
Group. The mitigating actions noted in that review mean that this
is not currently a trigger event causing our forecasts to be
sensitised for this risk. However, should the water levels fall to
a level that could not sustain production of artemia, this might
lead to an impairment. Were this to occur, other mitigating actions
available to the Group including obtaining artemia from other
globally available sources and exploiting our Diets portfolio to
reduce the use of artemia in our feed programmes would be explored.
As a result, management believe that no impairment to the carrying
value of the intangible assets is required.
Health
The pre-tax cashflows from the five-year projections were
discounted using a pre-tax discount rate of 16.4% (2021: 12.6%). An
assumed CAGR of revenue of 27% (2021: 70%) in the five-year plan
reflects the importance of the successful commercial ramp- up of
the business area's new sea lice treatment in the forecast period.
A long-term growth rate of 0.0% (2021: 0.0%) has been used to
extrapolate the terminal year cashflow 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.
The valuation of the Health cash generating unit indicates
sufficient headroom such that a reasonably possible change to key
assumptions is unlikely to result in an impairment in related
development costs.
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
2022 2021
Group GBP000 GBP000
===================================== ============ ============
Salmon eggs 14,037 9,830
Salmon broodstock 30,501 26,700
Salmon milt 606 365
Lumpfish fingerlings 1,090 1,104
Shrimp 424 366
===================================== ============ ============
Total biological assets 30 September 46,658 38,365
===================================== ============ ============
Analysed as
Current 25,780 17,121
Non-current 20,878 21,244
===================================== ============ ============
Total biological assets 30 September 46,658 38,365
===================================== ============ ============
Change in book value of biological assets
2021 2020
GBP000 GBP000
======================================================= ======== ========
Biological assets 1 October 38,365 32,469
Increase from production 48,067 36,872
Reduction due to sales (43,535) (34,768)
======================================================= ======== ========
Other movements in biological assets 4,532 2,104
Foreign exchange movement before fair value adjustment 1,704 311
Change in fair value through income statement 1,595 3,323
Foreign exchange impact on fair value adjustment 462 158
======================================================= ======== ========
Biological assets 30 September 46,658 38,365
------------------------------------------------------- -------- --------
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
2022 2021
GBP000 GBP000
======================================================= =========== ===========
Biological assets 1 October 26,700 21,051
Increase from production 28,720 22,428
Transfer to salmon eggs following harvesting (26,509) (19,602)
Foreign exchange movement before fair value adjustment 1,326 169
Change in fair value through income statement (31) 2,530
Foreign exchange impact on fair value adjustment 295 124
======================================================= =========== ===========
Biological assets 30 September 30,501 26,700
======================================================= =========== ===========
Significant unobservable inputs used in the valuation of salmon
broodstock
2022 2021
============================================== ======= =======
Number of eggs valued in broodstock (m units) 222 192
Average selling price per egg (GBP) 0.135 0.128
Future costs per egg (GBP) (0.021) (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
impairment losses. In the year this applied to GBP1,969,000 of
broodstock in Chile. As at 30 September the gross carrying amount
was GBP4,704,000 (2021: GBP4,674,000) and the accumulated
impairment losses were GBP2,735,000 (2021: GBP2,507,000).
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
GBP445,000. 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
GBP4,450,000.
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:
2022 2021
==================== ============ ============
Salmon eggs 291.1m units 242.0m units
Lumpfish fingerlings 2.0m units 2.4m units
-------------------- ------------ ------------
Total quantities held at 30 September were:
2022 2021
==================== ============ ============
Salmon eggs 103.9m units 79.9m units
Salmon broodstock 1,737 tonnes 1,577 tonnes
Lumpfish fingerlings 0.7m units 2.6m units
-------------------- ------------ ------------
11. Trade and other receivables
2022 2021
Group GBP000 GBP000
============================================================ ======== ========
Trade receivables 31,218 24,526
Less: provision for impairment of trade receivables (2,748) (2,493)
============================================================ ======== ========
Trade receivables - net 28,470 22,033
============================================================ ======== ========
Total financial assets other than cash and cash equivalents
measured at amortised cost 28,470 22,033
Other receivables - contingent consideration 887 1,028
============================================================ ======== ========
Total financial assets other than cash and cash equivalents
classified as measured at fair value through profit and
loss 887 1,028
Prepayments 14,989 11,114
Other receivables 12,031 12,323
============================================================ ======== ========
Total trade and other receivables 56,377 46,498
============================================================ ======== ========
Other receivables relate to the following items: VAT recoverable
GBP4,386,000 (2021: GBP2,650,000), research and development
expenditure tax credits and similar items GBP154,000 (2021:
GBP472,000), the right to receive an agreed proportion of a key
supplier's harvest* GBP5,249,000 (2021: GBP7,302,200), accrued
income of GBP1,377,000 (2021: GBP348,000) and other amounts
receivable of GBP865,000 (2021: GBP1,551,000).
*A financial liability of GBP5,249,000 (2021: GBP7,302,200) 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 GBP5,249,000 (2021:
GBP7,302,200) 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 in FY20. This relates to deferred
cash consideration dependent on the delivery of certain future
revenues in the financial year ended 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 2022 trade receivables of GBP5,943,000
(2021: GBP3,060,000) were past due but not impaired. They relate to
customers with no default history. The ageing analysis of these
receivables is as follows:
2022 2021
GBP000 GBP000
======================= ======== ========
Up to 3 months overdue 5,761 2,703
3 to 6 months overdue 218 211
6 to 12 months overdue (36) 146
======================= ======== ========
5,943 3,060
======================= ======== ========
Movements on the Group provision for impairment of trade
receivables are as follows:
2022 2021
GBP000 GBP000
========================================================= ========== ==========
At 1 October 2,493 3,216
Provided during the year 281 54
Unused provisions reversed (180) (637)
Receivables written off during the year as uncollectable - (22)
Foreign exchange movements 154 (118)
========================================================= ========== ==========
At 30 September 2,748 2,493
--------------------------------------------------------- ---------- ----------
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
2022 2021
Group GBP000 GBP000
================================================================== ======= =======
Trade payables 22,149 20,690
Other payables 1,127 1,978
Accruals 17,636 15,812
Other payables - tax and social security payments 3,799 2,076
================================================================== ======= =======
Financial liabilities, excluding loans and borrowings, classified
as financial liabilities measured at amortised cost 44,711 40,556
Financial contracts - hedging instrument 7,991 972
================================================================== ======= =======
Financial liabilities, excluding loans and borrowings, classified
as financial liabilities at fair value through profit or
loss 7,991 972
Financial contracts - hedging instrument 21 5,889
================================================================== ======= =======
Financial liabilities, excluding loans and borrowings, classified
as financial liabilities at fair value through hedging reserve 21 5,889
Deferred income 597 162
================================================================== ======= =======
Total trade and other payables 53,320 47,579
Less: non-current: contingent consideration in other payables
and financial contracts (8,996) (911)
================================================================== ======= =======
Current portion 44,324 46,668
------------------------------------------------------------------ ------- -------
Of the financial contracts GBP8,387,000 (2021: GBP6.708,000)
relates to a NOKUSD floating to fixed cross-currency interest rate
swap (CCS) and a NOK interest rate swap (IRS), both of which were
entered to fully match the timing and tenor of the underlying new
senior secured floating rate listed bond issue of NOK 750m.
The floating-to-fixed NOK IRS (notional NOK 300m) is designated
a cash flow hedge where any changes in the fair value of the swap
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 NOKUSD CCS (notional NOK450m) has been separated into two
synthetic swaps; the first is a floating-to-fixed NOKGBP interest
rate swap, being a cash flow hedge of the foreign exchange and
interest rate risk on NOK denominated debt. The fair value of this
synthetic swap is posted to the hedging reserve in equity. The
second synthetic swap is a fixed-to-fixed GBPUSD swap designated as
a net investment hedge in the USD net assets in the consolidated
accounts of Benchmark Holdings plc. The fair value of this leg is
posted to the foreign exchange translation reserve in equity.
13. Loans and borrowings
Group
2022 2021
GBP000 GBP000
=========================== ========== ==========
Non-Current
2025 750m NOK Loan notes 61,054 -
2023 850m NOK Loan notes - 75,478
Bank borrowings 17,226 19,314
Lease liabilities 14,765 14,945
=========================== ========== ==========
93,045 109,737
=========================== ========== ==========
Current
Bank borrowings 5,569 1,612
Lease liabilities 11,522 9,042
=========================== ========== ==========
17,091 10,654
=========================== ========== ==========
Total loans and borrowings 110,136 120,391
=========================== ========== ==========
At 30 September 2022 the fair value of the unsecured floating
rate listed green bond of NOK 750m was not materially different to
the nominal value and has not been separately disclosed. At 30
September 2021 the fair value of 2023 850m NOK Loan notes was
GBP73,981,000.
On 27 September 2022, the Group successfully issued a new
unsecured floating rate listed green bond of NOK 750m. The bond
which matures in September 2025, has a coupon of three-month NIBOR
+ 6.50% p.a. with quarterly interest payments, and is to be listed
on the Oslo Stock Exchange. The proceeds were used to repay the NOK
850m floating rate listed bond, originally raised in June 2019.
A USD 15m Revolving Credit Facility ("RCF") has been provided by
DNB Bank ASA (50%) and HSBC UK Bank PLC (50%). At 30 September 2022
GBP4,000,000 was drawn on this facility. The facility was undrawn
at 30 September 2021.
Benchmark Genetics Salten AS (formerly SalmoBreed Salten AS) had
the following loans (which are ring-fenced debt without recourse to
the remainder of the Group) at 30 September 2022:
- Term loan with a balance of NOK 165.6m (2021: NOK 180.0m)
provided by Nordea Bank Norge Abp. The loan is a five-year term
loan ending November 2023 at an interest rate of 2.5% above
three-month NIBOR.
- NOK 20.0m 12-month working capital facility provided by Nordea
Bank Norge Abp. This was undrawn at 30 September 2022 (2021:
undrawn).
- An additional NOK 17.5m overdraft facility was provided by
Nordea Bank Norge Abp during the year with maturity in December
2022. This facility was undrawn at 30 September 2022.
- Term loan with a balance of NOK 40.1m (2021: NOK 44.7m)
provided by Innovasjon Norge. The loan is a 12-and-a-half-year term
loan maturing in March 2031. The interest rate on this loan at 30
September 2022 was 4.95%. The interest rate on this loan is
variable.
- 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 on maturity of the Nordea term loan
above.
Subsequent to the year end on 1 November 2022, the Nordea Bank
term loan above was refinanced together with an existing undrawn
overdraft facility into a new loan facility of NOK 179.5m with a
new maturity date in a further five years no later than 15 January
2028. Other terms remain the same.
Furthermore on 21 November 2022, the Group refinanced the USD15m
RCF with a secured GBP20m RCF provided by DNB Bank ASA, maturing on
27 June 2025. The margin on this facility is a minimum of 2.75% and
a maximum of 3.25%, dependent upon the leverage of the Group above
the relevant risk free reference or IBOR rates depending on which
currency is drawn.
The lease liabilities are secured on the assets to which they
relate.
The currency profile of the Group's loans and borrowings is as
follows:
2022 2021
GBP000 GBP000
---------------- ------- -------
Sterling 16,619 13,912
Norwegian Krone 80,712 97,389
Thai Baht 954 1,258
Euro 272 351
US Dollar 10,888 6,508
Icelandic Krone 545 750
Other 146 223
110,136 120,391
================ ======= =======
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