TIDMBMK
RNS Number : 9864U
Benchmark Holdings PLC
29 November 2023
29 November 2023
Benchmark Holdings plc
("Benchmark", the "Company" or the "Group")
Full Year Results for the Financial Year ended 30 September
2023
Third consecutive year of financial and strategic delivery
Strategic steps to further streamline and integrate the Group,
positioning it for the next phase of growth
Benchmark, the aquaculture biotechnology company, announces its
full year audited results for the year ended 30 September 2023 (the
"period").
Financial highlights - Revenue growth and improved profitability
with steady progress in all business areas
-- Revenue from continuing operations increase of 7% (+7% CER**):
o Advanced Nutrition - strong performance in challenging shrimp
markets, further strengthening our leading market position ;
revenues -2% (-7% CER)
o Genetics - strong performance with record salmon egg sales in
our three facilities - Iceland, Norway and Chile; revenue growth of
+14% (+20% CER)
o Health - growing adoption of sea lice solution Ectosan (R) Vet
and CleanTreat (R) and increase in sales of Salmosan(R) Vet
resulting in revenue growth of 27% (+29% CER)
-- 15% increase (+16% CER) in Adjusted EBITDA from continuing
operations, excluding fair value movements from biological assets,
as a result of higher revenues and tight cost control
-- Adjusted EBITDA(1) margin from continuing operations
excluding fair value uplift from biological assets increased to 21%
(FY22: 20%)
-- Significant progress towards profitability:
o Adjusted operating profit from continuing operations increased
by 36% to GBP14.6m (FY22: GBP10.7m)
o Loss before tax from continuing operations reduced to GBP12.7m
(FY22 restated: GBP21.4m) due to the positive trading result and
lower finance costs, partially offset by higher exceptional
items
-- Significant improvement in cash generation with operational
cash flow close to double to GBP20m (FY22: GBP10.8m); cash
conversion(4) increased from 35% to 58%
-- Net debt(3) reduced to GBP65.5m (FY22: GBP73.7m)
-- Cash and cash equivalents of GBP35.6m and available liquidity of GBP48.8m
-- At 27 November, cash and cash equivalents of GBP29.3m and available liquidity of GBP41.5m
GBPm FY 2023 FY 2022 % AER % CER**
restated*
-------------------------------------------- -------- ----------- ------ --------
Revenue from continuing operations 169.5 157.7 7% 7%
-------------------------------------------- -------- ----------- ------ --------
Adjusted
-------------------------------------------- -------- ----------- ------ --------
Adjusted EBITDA(1) from continuing
operations 35.5 32.6 9% 11%
-------------------------------------------- -------- ----------- ------ --------
Adjusted EBITDA from continuing
operations excluding fair value
uplift from biological assets 35.6 31.0 15% 16%
-------------------------------------------- -------- ----------- ------ --------
Adjusted operating profit(2) from
continuing operations 14.6 10.7 36% 41%
-------------------------------------------- -------- ----------- ------ --------
Statutory
-------------------------------------------- -------- ----------- ------ --------
Operating loss from continuing operations (5.3) (6.2) 15% 22%
-------------------------------------------- -------- ----------- ------ --------
Loss before tax from continuing
operations (12.7) (21.4) 41% 44%
-------------------------------------------- -------- ----------- ------ --------
Loss for the period including discontinued
operations (21.6) (30.5) 29% 31%
-------------------------------------------- -------- ----------- ------ --------
Basic loss per share (p) (3.16) (4.60) 31%
-------------------------------------------- -------- ----------- ------ --------
Net debt(3) (65.5) (73.7)
-------------------------------------------- -------- ----------- ------ --------
Net debt excluding lease liabilities (45.6) (47.5)
-------------------------------------------- -------- ----------- ------ --------
* 2022 figures have been restated to reflect changes to the
ongoing continuing business during the year following the disposal
of the tilapia business
** 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 items.
(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
(4) Cash generated from operations after working capital and
taxes as percentage of Adj. EBITDA
Business Area Performance (continuing FY 2023 FY 2022 % AER % CER**
operations) restated
GBPm *
Revenue
-------- ---------- ------- --------
Genetics 65.5 57.4 14% 20%
-------- ---------- ------- --------
Advanced Nutrition 78.5 80.3 (2%) (7%)
-------- ---------- ------- --------
Animal Health 25.5 20.1 27% 29%
-------- ---------- ------- --------
Adjusted EBITDA(1)
-------- ---------- ------- --------
Genetics 15.7 17.4 (10%) (1%)
-------- ---------- ------- --------
* excluding fair value movements in biological assets 15.8 15.8 0% 8%
-------- ---------- ------- --------
Advanced Nutrition 18.4 19.0 (3%) (8%)
-------- ---------- ------- --------
Animal Health 4.8 0.1 4,295% 4,165%
-------- ---------- ------- --------
** 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 - commercial focus and programme of
efficiencies translate into business resilience and stronger market
position
-- Continued commercial focus leveraging technical services
capabilities and adapting to market conditions
-- Commenced implementation of structured programme of
operational efficiencies focused on automation, supply chain
integration, and digitalised data management
-- Continued innovation with launch of first AI-enabled live
feed counting tool SnappArt and establishment of new R&D
collaborations in Ecuador and Singapore
Genetics - continue to strengthen global position in salmon
eggs
-- Record volume of salmon eggs of 335 million, a 15% increase
-- Acquired remaining 10.52% minority interest in Benchmark
Genetics Iceland (50% of Group's salmon egg production) for
EUR9m
-- Doubling of sales demonstrate growing commercial traction in
Chile where our facilities obtained disease-free compartment status
enabling future exports
-- Development of a new shrimp genetics product portfolio
underway; shrimp activities reorganised and aligned to realise
synergies with Advanced Nutrition
-- Divestment of tilapia business through an MBO
-- Expanded R&D team with a focus on reproductive
technologies paving the way for breakthrough developments in
sterility and gene editing
Health - increased adoption of Ectosan (R) Vet and CleanTreat
(R)
-- Increased adoption of Ectosan (R) Vet and CleanTreat (R) by
large and small producers along the entire Norwegian coastline
-- Further progress in the development of a new business model
and configuration for CleanTreat (R) to integrate the system into
customers' wellboat infrastructure
-- Good year for our second sea lice treatment, Salmosan(R) Vet,
which showed a resurgence of demand driven mainly by label changes
which allow longer use in certain territories
Group - further streamlining and integration creating
opportunities for commercial and cost synergies
-- Important strategic alignment bringing together our salmon
activities under the leadership of our Head of Genetics and our
shrimp activities under the leadership of our Head of Advanced
Nutrition. This customer-centric structure will enable us to
increase our commercial impact with a combined offering and
customer network and realise synergies
-- Continued progress on sustainability initiatives including
energy efficiency and GHG emissions, certification and development
of novel feed ingredients. ESG rating improvement by MSCI to AA
-- Looking forward the Group remains focused on its four strategic pillars:
o Maintain and grow its leadership position in established
markets
o Expand its business through the launch of new products and
development of key growth vectors
o Continue to embed the "One Benchmark" culture and integrate
the Group to realise synergies
o Pursue strategic opportunities adhering to strict criteria
Current trading and outlook - positive momentum trading in-line
with management expectations
-- Good start to FY24 and positive momentum in the business
o Good visibility of revenues in salmon genetics
o Early indications of improvement in the shrimp markets
o Increase in sea lice treatments post period end with good
capacity utilisation of CleanTreat(R); expect normal
seasonality
Trond Williksen, CEO, commented:
"We delivered good growth in revenue and Adjusted EBITDA, and
increased cash conversion, despite challenging conditions in the
global shrimp markets. This demonstrates the strength of our
business and the agility of our organisation to adapt - mitigating
the impact of a soft market and taking advantage of commercial
opportunities to further consolidate our leading market position.
The new financial year has also started well and in line with our
expectations, with positive momentum in our three business
areas.
"Since the end of FY20 when we completed the Group
restructuring, we have been building a track record of growth and
improved profitability, reflected by revenues and Adjusted EBITDA
from continuing operations which have increased over this period by
61% and 128%, respectively.
"Benchmark is uniquely positioned in an industry that is
structurally growing supported by attractive megatrends. With a
clear strategy and an integrated commercial network covering the
main aquaculture species, we have significant opportunity to
deliver growth and shareholders returns. We will continue the
execution of our strategy to realise the value inherent in our
business for the benefit of all our stakeholders."
Presentation for analysts and institutional investors at 8am
GMT
Trond Williksen, Chief Executive Officer and Septima Maguire,
Chief Financial Officer will host a presentation for analysts and
institutional investors on the day at 08.00 GMT (09.00 CET).
The presentation will be held in person at Haakon Vlls Gate 2,
Oslo, Norway. To register your interest, please contact
benchmark@mhpgroup.com
A live webcast of the presentation will be available for
analysts and investors to join remotely at the following link:
https://channel.royalcast.com/hegnarmedia/#!/hegnarmedia/20231129_1
Equity Development webcast for retail investors at 12pm GMT
Trond Williksen, Chief Executive Officer and Septima Maguire,
Chief Financial Officer will host a second webcast for retail
investors and wealth managers at 12.00 GMT (13:00 CET). The webcast
is open to all existing and potential shareholders.
To register please visit:
https://www.equitydevelopment.co.uk/news-and-events/benchmark-investor-presentation-29november2023
Enquiries
Benchmark Holdings plc Tel: 0114 240 9939
Trond Williksen, CEO
Septima Maguire, CFO
Ivonne Cantu, Investor Relations
D eutsche Numis (Broker and NOMAD) Tel: 020 7260 1000
Freddie Barnfield, Duncan Monteith, Sher
Shah
MHP Tel: 020 3128 8100
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
2023 marks the third consecutive year of financial and strategic
delivery following the Group restructuring and the appointment of a
new management team in 2020. The new financial discipline and
commercial focus implemented by our CEO and CFO are now well
embedded in the Group and, together with our ongoing organisational
change programme, are driving continued growth and strategic
progress. Since 2020 Benchmark's revenue from continuing operations
has grown from GBP105.4m (after adjusting for GBP0.2m revenue from
the divested tilapia business) to GBP169m and Adjusted EBITDA has
increased from GBP15.5m (after adjusting for loss of GBP1.1m from
the divested tilapia business) to GBP35.5m, turning operating
cashflow positive. In the same period, operating loss has reduced
from GBP9.6m (after adjusting for loss of GBP1.2m from the divested
tilapia business) to GBP5.3m, and total loss for the year has
reduced from GBP31.9m to GBP21.6m.
We have a strong business with a capable organisation which is
capitalising on the attractive megatrends in our industry, and
which has proven its agility to adapt to the cyclicality in our end
markets, taking every opportunity to further consolidate our
leading market position.
The structural growth drivers in our industry are increasingly
compelling. Aquaculture plays a crucial role in meeting the demand
for seafood and represents a growing proportion of seafood
consumption.
In addition, there are a number of exciting trends gaining
momentum which are further driving the demand for innovative
biotechnology solutions which are our focus. For instance, the
increasing adoption of certification standards; the adoption of
technological advancements, from automation to genetic
improvements; the emergence of alternative feeds; and the increased
use of data driven, AI enabled decision making are all aligned with
and support Benchmark's future growth.
Organisational transformation
We continued our strategic journey to integrate and streamline
our organisation in order to realise synergies, reduce costs and
enhance our customer value proposition. This is an effort that
commenced three years ago and crystallised this year with the
integration of our Health, Genetics and Advanced Nutrition salmon
and shrimp offerings by species in order to drive greater synergies
into those end markets.
This means we can now fully leverage our customer relationships
and commercial footprint to cross-sell our offerings and develop
new products and solutions. Our salmon and shrimp activities are
now respectively led by Geir Olav Melingen and Patrick Waty, both
strong commercial leaders, who also continue to be business area
heads for Genetics and Advanced Nutrition. As a result of the
change we were able to streamline the teams with immediate cost
savings.
Listing venue and share price performance
It is evident to the Board that our share price does not reflect
the fundamental value of the business, its growing track record, or
unique strategic positioning and attractive prospects. In an effort
to address this longstanding issue, the Board decided to pursue a
listing in Oslo, the leading seafood market in order to attract
specialist investors and over time attain a fair valuation for our
shares. An initial listing on Euronext Growth Oslo announced in
November 2022 represented a first step towards this goal, to be
followed by an uplisting to the Oslo Børs, subject to shareholder
approval.
In 2023, we conducted a consultation with shareholders regarding
an uplisting to the Oslo Børs and simultaneous delisting from AIM.
However, we concluded from these discussions that it was necessary
to maintain listings on both Euronext Growth Oslo and on AIM for
the foreseeable future and keep an uplisting under review as part
of the Group's ongoing strategy to deliver shareholder value.
Board changes
During the year we made changes to the Board that increased
shareholder representation, improved the gender
balance, and addressed the normal Board rotation cycle.
In December we appointed Laura Lavers as Non-Executive Director.
Laura is an experienced investment professional with two decades of
experience and acts as shareholder representative for JNE Partners,
a significant shareholder in the Company. In April, we announced
the appointment of Torgeir Svae as Non- Executive Director with
Atle Eide stepping down at the same time. Torgeir is an Investment
Director at Kverva AS, one of the Company's main shareholders, and
acts as their shareholder representative.
Following the appointments of Mrs Lavers and Mr Svae, alongside
our independent directors, we have three Non-Executive Directors
representing our three main shareholders who collectively hold 71%
of the Company's shares.
As a step to enhance Board diversity in the normal rotation of
Directors, on 30 June we appointed Marie Danielsson as
Non-Executive Director and Chair of the Audit Committee succeeding
Kevin Quinn who joined the Board in 2016.
In December 2023, Susan Searle, the Company's most tenured Board
member, will conclude her service on the Board. The Board wishes to
express its heartfelt gratitude for her exceptional contributions
and dedicated work over the past decade.
Sustainability
Sustainability is at the core of our mission and our
sustainability strategy runs across all our business and extends to
our supply chain; it guides our decision-making and investment
strategy. Our sustainability report including in the group's Annual
Report for the year ended 30 September 2023 sets out the
initiatives the progress made during the year in our three
Sustainability pillars: Environment, Animal Welfare and People and
Communities. We set priorities for our three pillars in alignment
with a materiality assessment carried out annually which reflects
key areas of impact for the business and our stakeholders. This
year areas of focus included certification of our operations,
sustainability of our supply chain, and enhanced climate risk
assessment reporting.
Through enhanced disclosure and policies we were pleased to
achieve an improvement in our MSCI ESG ratings to AA.
We have an ambitious commitment to energy transition. In 2023,
we made substantial progress towards our Net Zero goals with the
installation of solar panels in our facility in Thailand which
represents the majority of our GHG emissions. The new solar panels
will be operational in Q1 FY24.
Our People
Benchmark is driven by a group of highly talented and motivated
people at all levels around the world, and I thank them all on the
Board's behalf for their contribution this year. We continued to
invest in making Benchmark a great place to work through an
ambitious engagement programme, new learning and development
resources, and regular, open communication with the management
team. For a third consecutive year we obtained excellent engagement
scores in our employee survey, well above the industry norm.
Looking forward
Our organisation is stronger than ever and, with market leading
positions in our three business areas, I am confident that we will
continue to build on our record of consistent delivery despite
short term headwinds in some of our markets. Our focus continues to
be on creating shareholder value by building a sustainably
profitable, cash generative business positioned to capitalise on
the opportunity to deliver healthy, nutritious, sustainable food
for our future generations.
Peter George
Chairman
Chief Executive Officer's Review
Delivery and strategic progress
Third consecutive year of financial and strategic delivery
I am pleased to report a third consecutive year of financial
delivery and strategic progress at Benchmark. The change programme
which we embarked on three years ago and which is ongoing has
transformed Benchmark into a robust and commercial organisation
with leading market positions focused on delivering growth and
shareholder value.
Supported by industry megatrends and growing interest in
sustainability, farming efficiency and animal welfare, Benchmark is
uniquely positioned in the aquaculture industry. With a clear focus
on three business areas - Genetics, Advanced Nutrition and Health
we deliver specialised, mission critical solutions that address the
most important challenges facing the aquaculture industry today.
This creates excellent opportunities and prospects ahead for
Benchmark.
FY23 Overview
We delivered good growth in revenue and Adjusted EBITDA despite
challenging conditions in the global shrimp markets. This
demonstrates the strength of our business and the agility of our
organisation to adapt - mitigating the impact of a soft market and
taking advantage of commercial opportunities to further consolidate
our leading market position. We continued to build on our
established track record of growth and improved profitability with
revenues increasing by 7%, and Adjusted EBITDA from continuing
operations excluding fair value movements from biological assets by
15%. Operating loss for the year reduced by 15% from the previous
year, and total loss for the year reduced 29%. Since the end of
FY20 when we completed the Group restructuring, revenues and
Adjusted EBITDA from continuing operations have increased by 61%
and 128%, respectively after adjusting for the divested tilapia
business. In the same period, operating loss reduced by 45% and
total loss for the year reduced by 32%.
Good performance in our core established business
Our three business areas reported good contribution and
progress. Advanced Nutrition showed the strength of an excellent
organisation and was able to land a good year despite weak shrimp
markets which resulted in a drop in demand for our products in key
markets. Genetics increased revenues by 14% driven by its core
established business with record salmon egg sales from its three
facilities in Iceland, Salten and Chile, and continued to invest in
its growth vectors. Health reported 27% revenue growth. With
leading market positions, good commercial momentum, and growth in
our underlying markets we expect further organic growth in our core
areas.
Innovation capability coupled with deep market insight sets us
apart. During the year we strengthened our Genetics R&D team
with a focus on reproductive technologies aiming to bring new
breakthroughs in sterility and gene editing to the market in the
coming years. In Advanced Nutrition we launched our first
AI-powered artemia counting tool SnappArt, an example of how we
incorporate state of the art technology into our product
offering.
Growth vectors
In addition to the growth potential across our established core
business, we have three significant growth vectors which represent
strategic priorities for the Group:
-- the commercial expansion of our salmon genetics into the Chilean market;
-- the commercialisation of our shrimp genetics products; and
-- the development of a new business model and operating
platform for Ectosan(R) Vet and CleanTreat(R).
During the year we devoted considerable effort and resources to
ensure that we have a compelling customer proposition and the right
infrastructure and cost base in each of our growth vectors to
deliver adequate returns.
Chile is the second largest salmon producing country in the
world and a natural new market for our salmon
genetics business. Barriers to entry in genetics are high and it
is by leveraging our world class genetics expertise to develop a
pure Chilean strain and our extensive operational capabilities that
we have a competitive product in the market which is reliable,
biosecure and high performing. Results from our first full
production cycle demonstrate this, translating into new customer
wins and a growing pipeline of orders supported by an intense
commercial effort from our local and global team.
We see significant potential in shrimp genetics as a driver of
growth and sustainability in shrimp production; indeed, this is an
area where Benchmark has world class capabilities and expertise. We
launched our first commercial shrimp genetics products in 2022
exporting breeders from our production facility in Florida to
multiple markets in Asia. Based on feedback from the first
commercial phase, in FY23 we decided to develop a new range of
products addressing a need in the market for growth and balanced
strains in addition to resistance, as well as a need for locally
adapted strains tailored to variations in customer needs across
countries. We undertook trials to enable product testing in local
conditions and our new product development is well progressed. We
also took the decision to exit our JV multiplication centre in
Thailand and plan to develop alternative market routes for our
shrimp genetics through partnerships with other industry players,
leveraging our extensive network and established relationships. In
order to leverage our leading market position and commercial
network in the shrimp market through Advanced Nutrition, we
combined our shrimp activities across Genetics and Advanced
Nutrition under the leadership of Patrick Waty, our Head of
Advanced Nutrition.
Our sea lice solution Ectosan(R) Vet and CleanTreat(R) has
proven to be highly efficacious, protective of animal welfare and
the environment, and represents a key growth vector for Benchmark.
During the year there was increased adoption of our sea lice
solution by small and large producers along the entire Norwegian
coastline. Full market penetration, however, relies on the
development of a new business model and configuration aligned to
our customers' infrastructure. During the year we signed an
agreement with a specialist wellboat equipment provider, MMC, and
ship designer, SALT, to integrate CleanTreat(R) systems into new
wellboats.
This also opens up opportunities for retro-fits or installations
on platforms other than the current PSV (platform supply vessel)
setup. The implementation of the new business model will allow us
to streamline the organisation and reduce capital intensity. Part
of these actions are reviewing different options to optimise
operations and cash flow on our journey towards fully integrated
customer-owned systems, including taking down the exposure to the
capital intensive setup we currently hold with two PSV's.
Strategic Action
We continue our efforts to integrate and streamline the Group -
making sure we have an organisation that is as optimal as possible
from an operational and commercial point of view. To this end we
executed an important alignment in the year bringing together our
salmon activities under the leadership of our Head of Genetics and
our shrimp activities under the leadership of our Head of Advanced
Nutrition. This customer-centric will enable us to increase our
commercial impact with a combined offering and customer network,
leveraging resources and knowledge and further strengthening our
market leading position.
Our overarching aim to achieve profitability and sustainable
cash generation led to the decision to exit from our tilapia
breeding operation while maintaining our exposure to this species
through our Genetic Services business. Having developed top
performing genetics and an efficient operation and supply chain,
the slow industrialisation and adoption of tilapia genetics in the
industry meant that we did not see a path to adequate returns in
the short and medium term. We were pleased to have exited the
business through a management buyout and we continue to work with
the new owners providing support for the breeding programme through
our Genetics Services activities.
Our culture and our people
Benchmark's purpose driven team and culture is our most
important asset. Our values underpin the way we conduct our
business and create a collaborative, innovative and commercial
organisation which I am very proud of. We take employee well-being
and engagement seriously and create regular opportunities to
facilitate dialogue. These are an important pillar in making
Benchmark a 'Great Place to Work'.
Looking forward - Outlook
We have had a good start to the year and there is good momentum
in the business. We have good visibility of sales in Genetics at
normalised levels following the supply shortage experienced Q1
FY23. In Advanced Nutrition we are seeing early signs of recovery
in the shrimp markets which we expect will contribute positively
from Q2 FY24 onwards. Our CleanTreat(R) units are currently
operating at a good capacity utilisation and we expect this to be
reflected in Q1 FY24. We expect normal seasonality with low
treatment volumes in the second half. We are considering actions to
optimise our operations and cashflow during the transition to an
integrated customer solution. The continued integration and
streamlining of the Group will enable us to further leverage the
Group capabilities and drive efficiencies contributing to a
positive outlook for the year ahead.
Looking into the future, we are uniquely positioned in an
industry that is structurally growing. With a clear strategy
addressing the main aquaculture species, we have significant
opportunity to deliver growth and shareholder returns. We will
continue the development of the Group and ongoing consideration of
our strategy to realise the value inherent in our business for the
benefit of all our stakeholders.
Trond Williksen
Chief Executive Officer
Financial Review
Strong and positive performance in the year
We continued to develop a business structured for growth and
resilience. FY23 has been a year of significant progress in which
we have delivered sales growth in both Genetics and Health, our two
salmon focussed business areas. Additionally, in Advanced
Nutrition, we have been able to continue to make progress even
despite difficult economic conditions in which the market
contracted. Our continued focus on cost and cash conservation has
proven key to our progress and we ended the year with healthy cash,
net debt and available liquidity position. We anticipate that the
shrimp markets will improve somewhat in FY24 and our shrimp
focussed businesses are poised to benefit. Salmon continues to be a
very solid market for the Group allowing us to continue to progress
the business in line with our strategic objective to be the
preferred supplier of salmon eggs in all key markets.
Overview of reported financial results During 2023, the Group's
focus was on continuing to strengthen the business and deliver good
commercial results and advancing its strategic priorities with the
aim to be cash generative.
Advanced Nutrition continued to deliver strong results even as
they faced headwinds in the shrimp markets demonstrating good
resilience within the business area. Genetics had a good year with
strong sales and solid results, and with Ectosan(R) Vet and
CleanTreat(R) sales gaining more traction in Health this resulted
in an increase in Group revenue of 7% to GBP169.5m in the year
(2022 restated: GBP157.7m). This increase in sales meant that gross
profit increased to GBP86.8m (2022 restated: GBP83.9m). Gross
margin was slightly down at 51% (2022 restated: 53%). Using the
same foreign exchange rates experienced in 2022 (constant currency
) revenue increased by 7%.
2022
As Reported (GBPm unless otherwise 2023 restated* % AER % CER(**)
stated)
Revenue from continuing operations 169.5 157.7 7% 7%
====== ========== ======= ===========
Operating loss from continuing operations (5.3) (6.2) 15% 22%
====== ========== ======= ===========
Loss before tax from continuing operations (12.7) (21.4) 41% 44%
====== ========== ======= ===========
Loss for the period including discontinued
operations (21.6) (30.5) 29% 31%
====== ========== ======= ===========
Basic loss per share (p) (3.16) (4.60) 31% -
====== ========== ======= ===========
*2022 numbers have been restated to reflect changes to the
ongoing continuing business following the disposal of the tilapia
business during the year.
** Constant exchange rate (CER) is the change year on year
translating current figures using last year's foreign exchange
rates.
Adjusted Measures (GBPm unless otherwise 2022
stated) 2023 restated(*) % AER % CER(**)
Gross profit from continuing operations 86.8 83.9 3% 4%
====== ============ ===== =========
Gross profit % 51% 53% - -
====== ============ ===== =========
Gross profit from continuing operations
exc movements in fair value of biological
assets 86.9 82.3 5% 6%
====== ============ ===== =========
Gross profit % 51% 52% - -
====== ============ ===== =========
Adjusted EBITDA(1) from continuing operations 35.5 32.6 9% 11%
====== ============ ===== =========
Adjusted EBITDA(1) margin % 21% 21% - -
====== ============ ===== =========
Adjusted EBITDA(1) from continuing operations
exc movements in fair value of biological
assets 35.6 31.0 15% 16%
====== ============ ===== =========
Adjusted EBITDA(1) exc fair value movements
margin % 21% 20% - -
====== ============ ===== =========
Adjusted Operating Profit(2) from continuing
operations 14.6 10.7 36% 41%
====== ============ ===== =========
Net debt(3) (65.5) (73.7) 11% -
====== ============ ===== =========
*2022 numbers have been restated to reflect changes to the
ongoing continuing business following the disposal of the tilapia
business during the year.
** Constant exchange rate (CER) is the change year on year
translating current figures using last year's foreign exchange
rates.
1 Adjusted EBITDA is EBITDA (earnings before interest, tax,
depreciation and amortisation and impairment) before exceptional
and acquisition-related items.
2 Adjusted Operating Profit is operating loss before exceptional
and acquisition-related items and amortisation of intangible assets
excluding development costs.
3 Net debt is cash and cash equivalents less loans, borrowings and lease obligations.
Business area performance
We continued to manage costs across the Group very closely.
Operating costs from the continuing business increased by 2% to
GBP45.2m (2022 restated: GBP44.1m) with increased costs in Genetics
and Advanced Nutrition driven in the main by inflation offset by
cost cuts in Health. Expensed R&D from continuing operations
decreased by 9% to GBP6.1m (2022 restated: GBP6.6m).
Adjusted EBITDA from continued operations increased by 9% to
GBP35.5m (2022 restated: GBP32.6m) driven by increased performance
in Health which offset Genetics where we had significant investment
in shrimp genetics as well as lower fair value uplift and Advanced
Nutrition.
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, in which currency balances are retranslated at the
same exchange rates 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 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
Gross profit and 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
Despite forex headwinds impacting both NOK and ISK, Genetics
delivered good growth in revenue driven by sales of salmon eggs
where volumes increased by 15% to 335 million eggs. Total revenues
from continuing operations of GBP65.5m (2022 restated: GBP57.4m)
were up 14%, 20% in constant currency.
Egg sales in our biggest market, Norway, increased by 17% during
the year, with most of the demand being met by higher production
volumes from our Salten facility. We also saw increased sales to
almost all other territories in the year, resulting in an increase
in revenue from salmon eggs of 19% to GBP45.6m (2022:
GBP38.3m).
In non-product-based revenue streams, revenues from harvested
fish were aided by increased salmon prices resulting in harvest
income in the year of GBP11.1m (2022: GBP8.5m). Royalties earned
from use of our genetic IP fell in the year, with sales down to
GBP0.5m (2022: GBP0.8m). No further revenues are expected from this
revenue stream as the expected unwind of contracts is now complete.
Genetic Services delivered slightly lower revenues of GBP1.2m in
the year (2022: GBP1.3m), but revenues from this income stream are
expected to increase in future years as we build on the strength
and depth of our recently expanded genetics team and our IP in the
business. Revenues from other products totalled GBP7.4m (2022:
GBP9.1m).
Gross profit from continuing operations reduced by 7% in 2023 to
GBP30.6m (2022 restated: GBP32.8m) and gross margin fell to 47%
(2022 restated: 57%). The reduction in gross margin was due to a
number of factors. We experienced higher third-party production
costs on our broodstock licence, inflation in our own costs and
non-capitalisation of shrimp development costs in the year (GBP1.0m
capitalised in 2022). Additionally, the fair value movement of bio
assets fell to a reduction of GBP0.1m in 2023 which is a
combination of a slowing in the growth of our biomass and lower
eggs being incubated at the end of the year, compared to an
increase of GBP1.6m in 2022, as the overall value of biological
assets fell versus prior year.
The previously announced strategic review of our tilapia
business was completed in Q4 and as a result we sold the tilapia
assets in a management buy-out. Our Genetics Services team will
continue to support the ongoing development of the tilapia breeding
programme on an arms-length basis. The tilapia operation had
revenues of GBP0.3m in the year (2022:GBP0.6m) and an AEBITDA loss
of GBP1.3m (2022: loss of GBP1.4m). We also booked exceptional
costs of GBP3.9m in the year (2022: GBPnil) relating to termination
of the business.
Our work to refine the shrimp genetics product line is ongoing
and we have lower commercial activities during the year. Prevailing
conditions in the shrimp markets have also affected this area of
our business. Shrimp sales in the year of GBP1.2m were behind last
year (2022: GBP2.0m) and Adjusted EBITDA losses of GBP3.6m were
GBP2.0m worse than prior year, GBP1.0m of which, as noted above,
was due to capitalisation of development costs for the shrimp
nucleus in 2022 before it launched commercially.
R&D spend was GBP0.6m lower in the year (2023: GBP3.7m,
2022: GBP4.3m) and operating costs were higher by GBP0.6m (2023:
GBP11.2m, 2022: GBP 10.6m) 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 to the joint venture with Salmar Genetics AS where we
recorded a share of profit of GBP0.03m in 2023 (2022: share of loss
of GBP0.5m), and a share of losses of GBP0.2m at Benchmark Genetics
Thailand (2022: share of losses of GBP0.1m). Post year- end, as
part of consolidating the shrimp genetics business under Patrick
Waty, Genetics has continued to establish its facilities in Chile
and with overall AEBITDA losses of GBP2.9m and GBP0.1m invested in
capex in these facilities in 2023 (2022: GBP3.4m and 0.6mm). These
facilities have potential production capacity of 50 million eggs
and is currently utilising capacity of around 30 million eggs.
During the year we sold 7 million eggs.
All these factors contributed to increased AEBITDA from
continuing business of GBP15.7m (2022 restated: GBP17.4m) and
AEBITDA margin of 24% (2022 restated: 30%). AEBITDA from continuing
business excluding fair value was the same as prior year at
GBP15.8m (2022 restated: GBP15.8m) with an AEBITDA margin of 24%
(2022 restated: 28%).
Advanced Nutrition
Throughout 2023, Advanced Nutrition delivered a resilient
performance driven by continued commercial and customer focus.
Advanced Nutrition had a good start to the year but at that stage
we could already see weakening within the shrimp markets. This
continued throughout the year but we have delivered strong results
despite the market trends. Revenues in Advanced Nutrition decreased
by only 2% in the year (7% at CER) as our strong commercial focus
has allowed us to continue to strengthen our position and take
increased market share even as the market has softened.
In 2023 and 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, artemia revenue were GBP36.7m (2022:
GBP37.4m) followed by diets GBP32.6m (2022: GBP35.3m). health which
covers our probiotic and environmental pond management portfolio
grew revenues by 13.6% to GBP9.2m (2022: GBP8.1m).
Gross profit of GBP43.8m (2022: GBP42.6m) showed an increase of
3% at AER but a reduction of 1% at CER after the effect of the
foreign exchange tailwinds. However, good cost control and reducing
logistics costs during the year along with lower cost of goods for
our Artemia products helped support the resilience of the business.
As a result we saw an increase in gross profit margin up from 53%
to 56%. This increase in gross profit was offset in part by an
increase in operating costs as we saw the full year effect of the
investment made in the business during 2022. There continued to be
strong cost control and where appropriate staff reductions
throughout this year in light of difficult market conditions.
Operating costs grew to GBP23.4m (2022: GBP21.5m). This led to
Advanced Nutrition reporting AEBITDA of GBP18.4m (2022: GBP19.0m)
and a slight decrease in AEBITDA margin from 24% to 23%.
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.
Health
Health reported revenue of GBP25.5m (2022: GBP20.1m) largely
reflecting increased market traction for Ectosan(R)Vet and
CleanTreat(R) which represented of GBP17.2m of revenue (2022:
GBP14.8m) of which GBP4.8m relates to revenue for vessel-related
costs (2022: GBP2.5m). Additionally, it was a good year for our
other sea lice treatment, Salmosan(R) Vet, which showed a
resurgence of demand in the year driven mainly by label changes
which allow longer use in certain territories and delivered revenue
of GBP8.3m (2022: GBP5.4m).
Gross profit increased by GBP3.8m to GBP12.3m, driven by the
increased sales from of Ectosan(R)Vet and CleanTreat(R) combined
with increased margins from Salmosan(R) Vet. Gross margin increased
to 48% (2022: 43%), due to increased Ectosan(R)Vet and
CleanTreat(R) sales.
During the year, the focus of this business area has been to
drive demand for Ectosan(R)Vet and CleanTreat(R) in Norway and also
to lay the ground work for moving the Cleantreat(R) treatments away
from Benchmark leased and controlled vessels, onto customer owned
platforms. This will reduce the capital intensive nature of the
solution and ultimately reduce costs for the customer, making it a
more attractive solution to use for the treatment of sea lice. To
date capacity utilisation on the Cleantreat(R) vessels varied with
treatment seasonality which translated into utilisation of c.50% in
each vessel during FY23. We are reviewing different options to
manage capacity and optimise operations and cash flow as we
transition towards fully integrated customer owned systems on
wellboats. This may include reducing the exposure to the capital
intensive setup we currently hold with two PSV's. With cash and
cost control being a very key focus for this business area,
operating costs decreased to GBP7.3m (2022: GBP8.1m) and research
and development fell to GBP0.3m (2022: GBP0.4m).
Adjusted EBITDA for the business area was GBP4.8m (2022:
GBP0.1m). AEBITDA margin was 19% for 2023 (2022: 1%).
Within Health and Genetics, given the commonality of customers
we adopted a single sales and marketing team approach which has
been in place during the financial year. To further drive these
efforts, Health and Genetics were brought under common operational
leadership during the year under Geir Olav Melingen. We will
continue to report these as separate segments to aid in
transparency of results.
Cost Inflation
As noted earlier, cost control remains of significant importance
in Benchmark and in the current inflationary environment becomes
even more so. During the year, we saw higher cost inflation in a
number of areas, the most significant of which related to salaries.
Within Health we were able to mitigate this by reducing the overall
number of headcount and limiting discretionary spend. Within
Genetics and Advanced Nutrition, we have, within the constraints of
existing contracts, tried to increase prices and also limit
discretionary spend to mitigate. Within Advanced Nutrition, a
number of roles were also reorganised to make the operation leaner
to best fit the current market conditions.
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.
2023 2022
GBPmil GBPmil
====== ======
Aborted acquisition related items 0.6 -
====== ======
Exceptional restructuring costs 0.9 1.2
====== ======
Costs associated with the Oslo listing 2.6 -
====== ======
Cost in relation to disposals (0.2) (1.2)
====== ======
Total exceptional items 3.9 (nil)
====== ======
The above table excludes GBP3.9m of exceptionals included within
discontinued operations as mentioned earlier.
Exceptional expenses in 2023 were mainly driven by legal and
professional costs in relation to the dual listing on the Oslo
exchange of and consideration of uplisting to the Oslo Børs of
GBP2.6m. Within Health and Advanced Nutrition some restructuring
occurred during the year, in Health to move towards the integration
of the operational leadership and within Advanced Nutrition to
adapt to the changes in the markets. This resulted in costs of
GBP0.9m (2022: GBP1.2m). The costs were offset by a credit of
GBP0.2m (2022: GBP1.2m) relating to additional contingent
consideration received in the period following the disposal of
Improve International on 23 June 2020, actually cash received was
GBP1.25m related to this divestment.
Depreciation, amortisation and impairments
Depreciation and impairment of tangible assets including
discontinued operations and right of use assets was GBP18.7m (2022
restated: GBP19.9m). In total, depreciation and impairment charges
on right of use assets under IFRS 16 was GBP10.3m (2022 restated:
GBP11.3m). The charge within discontinued operations included above
was GBP0.3m (2022: GBP0.2m). Amortisation and impairment of
intangible assets totalled GBP18.5m (2022: GBP19.2m). This includes
an impairment charge of GBP0.5m related to some intellectual
property within Health which is deemed no longer to be of value. We
expect the amortisation charge to start reducing from FY25 as some
of the Advanced Nutrition (INVE) assets will be fully amortised
then.
Research and development
Expensed Total expensed and capitalised
2023 2023
GBPm Continuing As % 2022 As % Continuing As % 2022 As %
business of sales restated of sales business of sales restated of sales
=========== ========== ========== ========== =========== ========== ========== ==========
Expensed R&D by
business
area
=========== ========== ========== ========== =========== ========== ========== ==========
Genetics 3.7 6% 4.3 7% 3.7 6% 5.2 9%
=========== ========== ========== ========== =========== ========== ========== ==========
Advanced Nutrition 2.1 3% 2.0 2% 2.1 3% 2.1 3%
=========== ========== ========== ========== =========== ========== ========== ==========
Health 0.3 1% 0.4 2% 0.9 4% 1.0 5%
=========== ========== ========== ========== =========== ========== ========== ==========
Total research and
development 6.1 4% 6.7 4% 6.7 4% 8.3 5%
=========== ========== ========== ========== =========== ========== ========== ==========
Expensed R&D activities decreased in the year by GBP0.5m
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 % 2022 As %
GBPm 2023 of sales restated of sales
Operating Expenses for continuing business by
Business Area
====== ========= ========= =========
Genetics 11.2 17% 10.6 18%
====== ========= ========= =========
Advanced Nutrition 23.4 30% 21.5 27%
====== ========= ========= =========
Health 7.3 29% 8.1 40%
====== ========= ========= =========
Corporate (net) 3.3 3.9
====== ========= ========= =========
Total operating expenses 45.2 27% 44.1 28%
====== ========= ========= =========
Other operating costs within the continuing business increased
from GBP44.1m in 2022 (restated) to GBP45.2m in 2023. The modest
increase in costs reflects the impact of cost inflation being
mitigated by good cost control and limiting discretionary
spend.
Discontinued Operations
During the year we initiated a strategic review of our tilapia
operations with a view to understanding the timeline to cash
generation within the area of our Genetics business. As a
consequence of this review we divested the business via a
management buy-out in the fourth quarter of the financial year.
Net finance costs
2022
GBPm 2023 restated
Interest Income (0.6) (0.3)
====== =========
Foreign Exchange gains (0.3) (2.8)
====== =========
Interest on bond and bank debt 8.4 6.2
====== =========
Amortisation of deferred financing fees 0.5 1.9
====== =========
Penalty for early settlement of the bond - 1.6
====== =========
Movements in hedging instruments (2.2) 7.0
====== =========
Finance lease interest 1.6 1.6
====== =========
Total net finance expenses 7.4 15.2
====== =========
The Group incurred net finance costs of GBP7.4m during the year
(2022 restated: GBP15.2m). Included within this was interest
charged on the Group's interest-bearing debt facilities of GBP8.4m
(2022: GBP6.2m), the higher interest cost was due to higher
utilisation of the RCF facility during the year and also higher
interest coupon on the bond. In addition, a further GBP0.5m was
charged on amortisation of the deferred finance costs (2022:
GBP1.9m). Net foreign exchange gains of GBP0.3m (2022 restated: net
gain of GBP2.8m) arose due to the movement in exchange rates on
intercompany loans and external debt. Movements on the hedging
instruments associated with the Group's NOK bond debt resulted in
gains of GBP2.2m (2022: loss of GBP7.0m).
Statutory loss before tax
The loss before tax from continuing operations for the year at
GBP12.7m is lower than the prior year (2022 restated: loss of
GBP21.4m). This was a result of the positive trading result offset
by higher exceptional items and lower finance costs due to changes
in fair value of in-effective portion of cash flow hedges slightly
offset by unfavourable foreign exchange movements.
Taxation
There was a tax charge on the loss for the year of GBP3.4m
(2022: GBP7.3m), 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 GBP21.6m, there was a
significant movement of GBP23.0m in OCI resulting from movements in
the foreign exchange and hedging reserves. The forex loss of
GBP23.5m was driven by USD and NOK impacting the retranslation of
foreign currency denominated subsidiary balance sheets into GBP
offset by amounts designated as net investment hedges, together
with long term internal loans not expected to be repaid in the
foreseeable future which are treated like equity with the movements
going directly to reserves. These were offset by GBP0.5m credit
into the hedge reserve from hedge accounting on cashflow
hedges.
Transfer and cancellation of share premium
During 2023, we obtained approval via the AGM to cancel part of
the share premium account and transfer it to retained earnings.
This amounted to GBP394.2m. This has allowed the business to
increase its distributable reserves and serves as a step towards
the goal of being a cash generative group, able to issue dividends
in line with its dividend policy.
Reported loss for the year
The loss for the year from the continuing business was GBP16.1m
(2022 restated: loss of GBP28.7m). The total loss from continuing
activities and discontinued operations was GBP21.6m (2022:
GBP30.5m).
Loss per share
Basic loss and diluted loss per share were both 3.16p (2022:
loss per share 4.60p). 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 33.7m.
Dividends
No dividends have been paid or proposed in either 2023 or 2022
and the Board is not recommending a final dividend in respect of
the year ended 30 September 2023.
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 2023, the carrying value of biological assets was
GBP46.0m (2022: GBP46.7m). This decrease is due principally to the
reduction in eggs available for sale in FY24 compared to FY23, as
demand for our eggs was higher at the start of FY23 while there
were supply issues in the market which did not affect Benchmark.
This has normalised during the year. The fair value movement on
biological assets included in cost of sales for the year was a
reduction of GBP0.1m (2022: uplift of GBP1.6m).
Intangibles
Additions to intangibles were GBP0.8m (2022: GBP1.9m) with the
main area of investment being capitalised development costs which
in the year decreased by GBP1.1m to GBP0.6m (2022: GBP1.7m).
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
project capitalised was Salmosan Vet (GBP0.6m).
Capital expenditure
During 2023, to manage cash, we curtailed the investment
incurred and focussed on purely business critical areas. The Group
incurred tangible fixed asset additions of GBP6.0m (2022: GBP10.8m)
broken down as follows:
-- Health: GBP0.7m (2022: GBP2.6m)
-- Genetics: GBP3.4m (2022: GBP5.6m)
-- Nutrition: GBP1.9m (2022: GBP2.6m)
Within Health, there was an increase in the provision to
demobilise the Cleantreat(R) units from the current vessels of
GBP0.4m and additional equipment for the existing Cleantreat(R)
units of GBP0.3m. Capex associated with our Genetics business was
GBP3.4m where we finished the building of new tanks at Salten to
support ramping up to the 150 million egg capacity at that facility
(GBP1.4m) and we continue to invest in our production footprint in
Iceland and Salten. 2023 saw minimal investment in our growth
initiatives in Chile and shrimp as we believe they have been
sufficiently invested. In Advanced Nutrition we continued to invest
in the two manufacturing facilities to support growth and
operational efficiency.
Cashflow, liquidity and net debt
2023 2022
Movement in net debt GBPm GBPm
Net debt at 30 September 2022/2021 (73.7) (80.9)
====== ======
Cash generated from operations excluding working capital
and taxes paid 29.6 30.3
====== ======
Investment in working capital (1.1) (12.0)
====== ======
Capital expenditure (6.8) (12.7)
====== ======
Other disposal activities 0.2 (0.2)
====== ======
Foreign exchange on cash and debt 4.3 10.5
====== ======
Interest and tax (17.1) (17.0)
====== ======
Proceeds from previous year disposals of subsidiaries 1.3 1.5
====== ======
Acquisition of subsidiaries net of cash/debt acquired (0.2) -
====== ======
Investment in associates (0.6) (0.4)
====== ======
Acquisition of non controlling interest (8.0) -
====== ======
Additions to/modifications of leases (IFRS 16) (3.7) (11.5)
====== ======
Shares issued 10.9 20.2
====== ======
Other non-cash movements (0.6) (1.5)
====== ======
Net debt at 30 September 2023/2022 (65.5) (73.7)
====== ======
Cash flow
With improved trading in the business, we saw strong cash
generated from operations of GBP29.6m (2022: GBP30.3m). During 2023
with significant focus on cash conservation, we restricted the
investment in working capital to GBP1.1m versus an outflow last
year GBP12.0m. Interest and taxes were in line with last year.
Capital expenditure, both intangible and tangible, showed a
significant decrease of GBP5.9m to GBP6.8m (2022: GBP12.7m) as we
continue to moderate our capex.
Working capital
Working capital has reduced slightly in the period driven by a
number of factors. We can see the impact of foreign exchange on the
balance sheet as noted above in the other comprehensive income
section and this impacted the working capital balances at 30
September 2023, but our investment in working capital was more
moderate this year as can be seen in the cash flow.
We noted earlier the decrease in biological assets within the
genetics areas. Other Inventories fell in Advanced Nutrition as we
had less GSL Artemia in inventory than previous years.
In Health, we had transferred the CleanTreat(R) equipment into
inventory in 2022 but we had lower levels of inventory of
Salmosan(R) Vet than 2022.
Trade debtors and creditors, of course, increased as a result of
increased sales but trade debtors decreased as a percentage of
sales from 20% to 16% in the year. Trade payables were 20% higher
than last year as expected from higher level of costs both from
activity levels and from cost inflation.
A significant amount of cash is tied up with the working capital
of the group and focus will continue to be on releasing that
investment in the years to come.
Refinancing and borrowing facilities
The Group has a 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. The Group also had a USD 15m revolving credit
facility ("RCF") which was due to mature in December 2022 and had
GBP4m drawn at 30 September 2022. During the year, this RCF was
refinanced by a new GBP20m RCF on 21 November 2022 with a June 2025
maturity. The interest rate on the facility is between 2.5% and
3.25% above compound interest rate depending on leverage. At 30
September 2023, there was GBP7.75m drawn on this facility (2022:
GBP4.0m).
There are other borrowing facilities held within Benchmark
Genetics Salten AS which were originally put in place to fund the
building of the Salten salmon eggs facility. On 1 November 2022 the
term loan facility outstanding balance and the overdraft facility
provided by Nordea were refinanced into one facility totalling
NOK179.5m with a maturity date of January 2028. The margin on the
new facility is 2.5%. In addition, a working capital facility of
NOK 20.0m (renewal annually in March) is in place for use solely by
Benchmark Genetics Salten AS. This facility is undrawn (2022:
undrawn). Two additional ten-year term loans of NOK 25,000,000 and
NOK 30,000,000 respectively provided by Innovasjon Norge in 2018.
These loans currently have a flat interest rate of 5.95% per
annum.
Cash and total debt
Net debt
GBPm 2023 2022
Cash 36.5 36.4
====== ======
NOK 750m bond (57.6) (62.0)
====== ======
Other borrowings (24.5) (21.8)
====== ======
Lease liabilities (19.9) (26.3)
====== ======
Net debt (65.5) (73.7)
====== ======
The RCF combined with the year-end cash balance of GBP36.5m
(2022: GBP36.4m) means the Group had total liquidity of GBP48.8m
(2022: GBP45.8m). 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
required to crystalise the growth opportunities which are part of
the strategic priorities of the Group and provide adequate
headroom.
Equity raise and Oslo Euronext Growth Listing
In December 2022, GBP10.8m net proceeds were raised through a
placing to provide the Company with sufficient free float to
establish a listing on Oslo Euronext Growth. The listing was
completed on 15 December 2022 and we have remained dual listed
since that time. During 2023, the Board considered an uplisting to
Oslo Børs but ultimately through shareholder consultation, the
decision was made to remain dual listed on Euronext Growth and AIM.
The proceeds of this equity raise facilitated us in having
sufficient available cash to purchase the minority interest in our
Icelandic operation.
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
2023 is GBP48.8m (2022: GBP45.8m). The equity ratio, defined as
'the ratio of Book Equity to Total Assets' must always exceed 40%.
The equity ratio at 30 September 2023 was 60% (2022: 61%). 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 60.0% at 30 September 2023 (2022:
51.3%).
Acquisition of Iceland minority Interest
In December 2014 Benchmark acquired an 89.48% interest in
Stofnfiskur, subsequently rebranding it Benchmark Genetics Iceland.
Since the acquisition, the business has grown substantially,
benefitting from Benchmark's leading market position, investment
and knowledge transfer within the Group. In February 2023, we
acquired the remaining 10.52% minority interest in Benchmark
Genetics Iceland for a consideration of EUR9m. This acquisition is
strategically important as Benchmark Genetics Iceland is core to
the Company's ability to supply highly specialist, biosecure salmon
eggs year-round to salmon producers in c.25 countries around the
world. Benchmark Genetics Iceland represents 50% of the Group's
salmon egg capacity.
Going concern
As at 30 September 2023 the Group had net assets of GBP282.6m
(2022: GBP323.3m), including cash of GBP36.5m (2022: GBP36.4m) as
set out in the Consolidated Balance Sheet. The Group made a loss
for the year of GBP21.6m (2022: GBP30.5m). As at 30 September 2023
the Company had net assets of GBP363.2m (2022: GBP346.6), including
cash of GBP0.3m (2022: GBP3.2m) as set out on the Company Balance
Sheet. The Company made a loss for the year of GBP4.2m (2022:
GBP16.5m).
As noted in the Strategic Report, the business has performed
steadily during the year, showing resilience to some tough market
conditions towards the end of the year. 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 reduction in short-term treatment
capacity. Key downside sensitivities modelled in other areas
included assumptions on slower commercialisation of SPR shrimp,
slower salmon egg sales growth in Chile and removal of an
additional financing opportunity within Genetics, along with
sensitivities on sales growth in revenues and pressure on pricing
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, tight control over new hires,
deferral of capital projects and temporary hold on R&D for
non-imminent products.
The refinancing exercise which commenced in FY22 was completed
at the start of FY23, so that adequate finance facilities are in
place, and with financial instruments in place to fix interest
rates and opportunities available to mitigate globally high
inflation rates, the Group continues to show resilience against
current global economic pressures. The Directors are therefore
confident that even under all of the above sensitivity analysis,
the Group has sufficient liquidity and resources throughout the
period under review whilst still maintaining adequate headroom
against the borrowing covenants. They 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 2023
2022
2023 Restated*
GBP000 GBP000
====================================================== =================== ================
Revenue 169,476 157,707
Cost of sales (82,726) (73,777)
===================================================== =================== ================
Gross profit 86,750 83,930
Research and development costs (6,069) (6,634)
Other operating costs (45,157) (44,095)
Share of (loss)/profit of equity-accounted investees,
net of tax (32) (595)
====================================================== =================== ================
Adjusted EBITDA(2) 35,492 32,606
Exceptional - restructuring/acquisition
and disposal related items 4 (3,904) 16
===================================================== =================== ================
EBITDA(1) 31,588 32,622
Depreciation and impairment (18,409) (19,692)
Amortisation and impairment (18,495) (19,161)
===================================================== =================== ================
Operating loss (5,316) (6,231)
Finance cost 3 (15,048) (19,893)
Finance income 3 7,670 4,741
===================================================== =================== ================
Loss before taxation (12,694) (21,383)
Tax on loss (3,365) (7,268)
===================================================== =================== ================
Loss from continuing operations (16,059) (28,651)
Discontinued operations
Loss from discontinued operations, net of
tax 5 (5,505) (1,800)
===================================================== =================== ================
(21,564) (30,451)
====================================================== =================== ================
Loss for the year attributable to:
- Owners of the parent (23,146) (32,087)
- Non-controlling interest 1,582 1,636
===================================================== =================== ================
(21,564) (30,451)
====================================================== =================== ================
Earnings per share
Basic loss per share (pence) 6 (3.16) (4.60)
Diluted loss per share (pence) 6 (3.16) (4.60)
===================================================== =================== ================
Earnings per share - continuing operations
Basic loss per share (pence) 6 (2.41) (4.34)
Diluted loss per share (pence) 6 (2.41) (4.34)
----------------------------------------------------- ------------------- ----------------
GBP000 GBP000
====================================================== =================== ================
Adjusted EBITDA from continuing operations 35,492 32,606
====================================================== =================== ================
Adjusted EBITDA from discontinued operations (1,254) (1,425)
====================================================== =================== ================
Total Adjusted EBITDA 34,238 31,181
====================================================== =================== ================
1. EBITDA - earnings before interest, tax, depreciation, amortisation and impairment.
2. Adjusted EBITDA - EBITDA before exceptional and acquisition-related items.
* 2022 numbers have been restated to reflect certain operations
of the Group that have been classified as discontinued operations
during the year in line with IFRS 5
Consolidated Statement of Comprehensive Income
for the year ended 30 September 2023
2023 2022
GBP000 GBP000
======================================================= ================== ==================
Loss for the year (21,564) (30,451)
Other comprehensive income
Items that are or may be reclassified subsequently
to profit or loss
Foreign exchange translation differences (23,475) 47,606
Cash flow hedges - changes in fair value (2,123) 2,627
Cash flow hedges - reclassified to profit or loss 2,623 2,546
======================================================= ================== ==================
Total comprehensive income for the period (44,539) 22,328
======================================================= ================== ==================
Total comprehensive income for the period attributable
to:
- Owners of the parent (45,404) 20,326
- Non-controlling interest 865 2,002
======================================================= ================== ==================
(44,539) 22,328
======================================================= ================== ==================
Total comprehensive income for the period attributable
to owners of the parent:
- Continuing operations (39,777) 21,509
- Discontinued operations* (5,627) (1,183)
======================================================= ================== ==================
(45,404) 20,326
======================================================= ================== ==================
* Total comprehensive income for the period relating to
discontinued operations for FY23 includes the loss of GBP5,505,000
(2022: GBP1,800,000) and foreign exchange loss of GBP122,000 (2022:
gain of GBP617,000).
Consolidated Balance Sheet
as at 30 September 2023
2023 2022
Notes GBP000 GBP000
================================================ ================== ==================
Assets
Property, plant and equipment 7 73,411 81,900
Right-of-use assets 8 19,804 27,034
Intangible assets 9 206,077 245,264
Equity-accounted investees 3,558 3,113
Other investments 14 15
Biological and agricultural assets 11 18,406 20,878
============================================ ================== ==================
Non-current assets 321,270 378,204
================================================ ================== ==================
Inventories 25,269 29,813
Biological and agricultural assets 11 27,586 25,780
Trade and other receivables 10 59,795 56,377
Cash and cash equivalents 36,525 36,399
============================================ ================== ==================
149,175 148,369
Assets held for sale 850 -
============================================ ================== ==================
Current assets 150,025 148,369
================================================ ================== ==================
Total assets 471,295 526,573
================================================ ================== ==================
Liabilities
Trade and other payables 13 (47,329) (44,324)
Loans and borrowings 14 (20,045) (17,091)
Corporation tax liability (6,422) (10,211)
Provisions (1,280) (1,631)
============================================ ================== ==================
Current liabilities (75,076) (73,257)
================================================ ================== ==================
Loans and borrowings 14 (81,954) (93,045)
Other payables 13 (6,842) (8,996)
Deferred tax (24,106) (27,990)
Provisions (700) -
============================================ ================== ==================
Non-current liabilities (113,602) (130,031)
================================================ ================== ==================
Total liabilities (188,678) (203,288)
================================================ ================== ==================
Net assets 282,617 323,285
================================================ ================== ==================
Issued capital and reserves attributable
to owners of the parent
Share capital 739 704
Additional paid-in capital 37,428 420,824
Capital redemption reserve 5 5
Retained earnings 183,489 (185,136)
Hedging reserve (203) (703)
Foreign exchange reserve 54,947 77,705
============================================ ================== ==================
Equity attributable to owners of the parent 276,405 313,399
Non-controlling interest 6,212 9,886
============================================ ================== ==================
Total equity and reserves 282,617 323,285
================================================ ================== ==================
The financial statements were approved and authorised for issue
by the Board of Directors on 29 November 2023 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 2023
Total
Additional attributable
paid-in to equity Non-
Share share Other Hedging Retained holders controlling Total
capital capital reserves reserve earnings of parent interest equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
=========================
As at 1 October 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 equity - (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
Acquisition of NCI - - - - - - - -
========================= ======== ========== ========= ======== ========= ============= ============ ========
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
========================= ======== ========== ========= ======== ========= ============= ============ ========
Comprehensive income for
the year
========================= ======== ========== ========= ======== ========= ============= ============ ========
(Loss)/profit for the
period - - - - (23,146) (23,146) 1,582 (21,564)
Other comprehensive
income - - (22,758) 500 - (22,258) (717) (22,975)
========================= ======== ========== ========= ======== ========= ============= ============ ========
Total comprehensive
income
for the year - - (22,758) 500 (23,146) (45,404) 865 (44,539)
========================= ======== ========== ========= ======== ========= ============= ============ ========
Contributions by and
distributions
to owners
Share issue 35 12,985 - - - 13,020 - 13,020
Share issue costs
recognised
through equity - (2,146) - - - (2,146) - (2,146)
Cancellation of part of
share
premium account - (394,235) - - 394,235 - - -
Share-based payment - - - - 1,006 1,006 - 1,006
========================= ======== ========== ========= ======== ========= ============= ============ ========
Total contributions by
and
distributions to owners 35 (383,396) - - 395,241 11,880 - 11,880
========================= ======== ========== ========= ======== ========= ============= ============ ========
Changes in ownership
Acquisition of NCI - - - - (3,470) (3,470) (4,359) (8,009)
========================= ======== ========== ========= ======== ========= ============= ============ ========
Total changes in
ownership
interests - - - - (3,470) (3,470) (4,359) (8,009)
========================= ======== ========== ========= ======== ========= ============= ============ ========
Total transactions with
owners of the Company 35 (383,396) - - 391,771 8,410 (4,539) (8,009)
========================= ======== ========== ========= ======== ========= ============= ============ ========
As at 30 September 2023 739 37,428 54,952 (203) 183,489 276,405 6,212 282,617
========================= ======== ========== ========= ======== ========= ============= ============ ========
Consolidated Statement of Cash Flows
for the year ended 30 September 2023
2023 2022
Notes GBP000 GBP000
======================================================= ================== ==================
Cash flows from operating activities
Loss for the year (21,564) (30,451)
Adjustments for:
Depreciation and impairment of property,
plant and equipment 8,453 8,602
Depreciation and impairment of right-of-use
assets 10,260 11,293
Other adjustments for non-cash items - (276)
Amortisation and impairment of intangible
fixed assets 18,495 19,161
Profit on sale of property, plant and equipment (121) (43)
Loss on sale of discontinued operation 3,774 -
Finance income (2,802) (319)
Finance costs 10,535 18,437
Increase in fair value of contingent consideration
receivable - (1,203)
Share of loss of equity-accounted investees,
net of tax 32 595
Foreign exchange gains (1,814) (3,985)
Share-based payment expense 1,005 1,182
Tax expense 3,365 7,274
Increase in trade and other receivables (6,570) (8,511)
Decrease/(increase) in inventories 2,877 (5,406)
Increase in biological and agricultural
assets (1,659) (6,099)
Increase in trade and other payables 3,909 6,948
Increase in provisions 386 1,058
======================================================= ------------------ ==================
28,561 18,257
Income taxes paid (8,556) (7,447)
======================================================= ================== ==================
Net cash flows generated from operating activities 20,005 10,810
======================================================= ================== ==================
Investing activities
Acquisition of subsidiaries (48) -
Purchase of investments in associates (558) (378)
Receipts from disposal of subsidiaries 1,250 1,544
Purchases of property, plant and equipment (5,953) (10,808)
Purchase of intangibles (196) (205)
Capitalised research and development costs (632) (1,708)
Proceeds from sale of fixed assets 227 220
Cash receipts from swap contracts 11 -
Interest received 627 119
======================================================= ================== ==================
Net cash flows used in investing activities (5,272) (11,216)
======================================================= ================== ==================
Financing activities
Proceeds of share issues 13,020 20,737
Share-issue costs recognised through equity (2,146) (562)
Acquisition of minority interests in subsidiaries (8,009) -
Proceeds from bank or other borrowings 21,847 67,939
Repayment of bank or other borrowings (18,470) (74,874)
Interest and finance charges paid (9,131) (9,629)
Repayments of lease liabilities (9,438) (10,533)
======================================================= ================== ==================
Net cash used in financing activities (12,327) (6,922)
======================================================= ================== ==================
Net increase/(decrease) in cash and cash equivalents 2,406 (7,328)
Cash and cash equivalents at beginning of year 36,399 39,460
Effect of movements in exchange rate (2,280) 4,267
======================================================= ================== ==================
Cash and cash equivalents at end of year 36,525 36,399
======================================================= ================== ==================
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 2023. 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 (i)
UK-adopted International Accounting Standards and (ii) IFRS adopted
pursuant to Regulation (EC) No. 1606/2002 as it applied in the
European Union ("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 2023
or 2022 but is derived from those accounts. Statutory accounts for
2022 have been delivered to the registrar of companies, and those
for 2023 will be delivered in due course. The auditor has reported
on those accounts. The auditor's reports for 2023 and for 2002 were
both (i) unqualified and (ii) 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 2023 the Group had net assets of GBP282.6m
(2022: GBP323.3m), including cash of GBP36.5m (2022: GBP36.4m) as
set out in the Consolidated Balance Sheet. The Group made a loss
for the year of GBP21.6m (2022: GBP30.5m).
As noted in the Strategic Report, the business has performed
steadily during the year, showing resilience to some tough market
conditions towards the end of the year. 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 reduction in short-term treatment
capacity. Key downside sensitivities modelled in other areas
included assumptions on slower commercialisation of SPR shrimp,
slower salmon egg sales growth in Chile and removal of an
additional financing opportunity within Genetics, along with
sensitivities on sales growth in revenues and pressure on pricing
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, tight control over new hires,
deferral of capital projects and temporary hold on R&D for
non-imminent
products.
The refinancing exercise which commenced in FY22 was completed
at the start of FY23, so that adequate finance facilities are in
place, and with financial instruments in place to fix interest
rates and opportunities available to mitigate globally high
inflation rates, the Group continues to show resilience against
current global economic pressures. The Directors are therefore
confident that even under all of the above sensitivity analysis,
the Group has sufficient liquidity and resources throughout the
period under review whilst still maintaining adequate headroom
against the borrowing covenants. They 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 -the segment 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
Genetics Nutrition Health Corporate sales Total
Year ended 30 September 2023 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
======================================== ======== ============ ======== ========= ============= ==========
Revenue 65,791 78,503 25,514 5,747 (5,811) 169,744
Cost of sales (35,876) (34,704) (13,173) - 54 (83,699)
======================================== ======== ============ ======== ========= ============= ==========
Gross profit / (loss) 29,915 43,799 12,341 5,747 (5,757) 86,045
Research and development costs (3,778) (2,071) (279) - - (6,128)
Operating costs (11,696) (23,354) (7,290) (9,064) 5,757 (45,647)
Share of profit of equity-accounted
investees, net of tax (32) - - - - (32)
======================================== ======== ============ ======== ========= ============= ==========
Adjusted EBITDA 14,409 18,374 4,772 (3,317) - 34,238
Exceptional - restructuring/acquisition
and disposal related items (3,913) (920) (509) (2,475) - (7,817)
======================================== ======== ============ ======== ========= ============= ==========
EBITDA 10,496 17,454 4,263 (5,792) - 26,421
Depreciation and impairment (4,703) (2,437) (11,559) (14) - (18,713)
Amortisation and impairment (1,894) (14,269) (2,329) (3) - (18,495)
======================================== ======== ============ ======== ========= ============= ==========
Operating profit / (loss) 3,899 748 (9,625) (5,809) - (10,787)
Finance cost (15,082)
Finance income 7,670
======================================== ======== ============ ======== ========= ============= ==========
Loss before tax (18,199)
======================================== ======== ============ ======== ========= ============= ==========
Inter-
Advanced segment
Genetics Nutrition Health Corporate sales Total
Year ended 30 September 2022 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
and disposal 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)
================================== ======== ============ ======== ========= ============= ==========
Non-current assets by location of assets
2023 2022
GBP000 GBP000
--------------- ------- -------
Belgium 144,344 173,136
Norway 74,541 83,752
UK 29,690 42,373
Iceland 37,631 39,448
Rest of Europe 1,017 953
Rest of world 34,047 38,543
--------------- ------- -------
321,270 378,204
--------------- ------- -------
3. Net finance costs
2022
2023 Restated
Continuing operations GBP000 GBP000
================================================================ ================== =========
Interest received on bank deposits 627 319
Foreign exchange gains on financing activities 158 4,422
Foreign exchange gains on operating activities 4,709 -
Cash flow hedges - ineffective portion of changes in fair
value 2,176 -
================================================================ ================== =========
Finance income 7,670 4,741
================================================================ ================== =========
Leases (interest portion) (1,620) (1,580)
Cash flow hedges - re-classified from OCI - (2,546)
Cash flow hedges - in-effective portion of changes in fair
value - (4,475)
Foreign exchange losses on operating activities (4,547) (1,620)
Interest expense on financial liabilities measured at amortised
cost (8,881) (9,672)
================================================================ ================== =========
Finance costs (15,048) (19,893)
================================================================ ================== =========
Net finance costs recognised in profit or loss (7,378) (15,152)
================================================================ ================== =========
4. Exceptional items - restructuring, acquisition and disposal 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.
2023 2022
GBP000 GBP000
================================== ========= =========
Acquisition related items 652 -
Exceptional restructuring costs 3,470 1,229
Disposal related items (218) (1,245)
================================== ========= =========
Total exceptional items 3,904 (16)
================================== ========= =========
Acquisition related items comprise fees incurred in the year in
connection with an aborted acquisition.
Exceptional costs include: GBP2,598,000 (2022: GBP843,000) of
legal and professional costs in relation to preparing for listing
the Group on the Oslo stock exchange, and GBP872,000 (2022:
GBP276,000) relating to restructuring costs.
Disposal related items include a credit of GBP235,000 (2022:
GBP1,203,000) 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 GBP17,000 relating to additional costs
and disposals proceeds relating to disposals that occurred in
2020.
5. Discontinued operations
During the year, the group divested its tilapia business for
consideration of USD 1 in a management buy out. Consequently, these
operations have been classified as discontinued in the current year
with a corresponding restatement of the consolidated income
statement and OCI for the year ended 30 September 2022 to reflect
these changes.
Summary of restatement of FY22 results as reported in FY22
financial statements
Discontinued
Continuing operations operations
=========================================== ==================================== ===============
Loss from Loss from
Adjusted continuing discontinued
Revenue EBITDA operations operations
GBP000 GBP000 GBP000 GBP000
===========================================
As stated in financial year 2022 financial
statements 158,277 31,181 (30,451) -
Reclassified in financial year 2023 (570) 1,425 1,800 (1,800)
As stated in financial year 2023 financial
statements 157,707 32,606 (28,651) (1,800)
=========================================== ========= ========== ============= ===============
Restated
2023 2022
GBP000 GBP000
====================================== ================== ========
Revenue 268 570
Cost of sales (973) (1,372)
====================================== ================== ========
Gross profit (705) (802)
Research and development costs (59) (57)
Other operating costs (490) (566)
====================================== ================== ========
Adjusted EBITDA (1,254) (1,425)
Exceptional loss on disposal (3,913) -
====================================== ================== ========
EBITDA (5,167) (1,425)
Depreciation and impairment (304) (205)
====================================== ================== ========
Operating loss / Loss before taxation (5,471) (1,630)
Net finance costs (34) (164)
====================================== ================== ========
Loss before taxation (5,505) (1,794)
Tax on loss - (6)
====================================== ================== ========
Loss from discontinued operations (5,505) (1,800)
====================================== ================== ========
Exceptional items within discontinued operations
2022
2023 Restated
GBP000 GBP000
===================================== =================== =========
Loss on disposal of trade and assets 3,774 -
Other costs relating to disposals 139 -
===================================== =================== =========
Total exceptional loss on disposal 3,913 -
===================================== =================== =========
Cash flows from discontinued operations
2023 2022
GBP000 GBP000
=========================================== ======= =======
Net cash flow from operating activities (1,609) (1,312)
Net cash flow from investing activities (27) (341)
Net cash flow from financing activities (106) 77
=========================================== ======= =======
Net cash flow from discontinued operations (1,742) (1,576)
=========================================== ======= =======
Results from discontinued operations by segment
The results from discontinued operations relate solely to the
Genetics operating segment.
Impact on the Group Consolidated Income Statement for the year
ended 30 September 2023
2023 2023 2023
Continuing Discontinued Total
GBP000 GBP000 GBP000
=============================================== =========== ============= =========
Revenue 169,476 268 169,744
Cost of sales (82,726) (973) (83,699)
=============================================== =========== ============= =========
Gross profit 86,750 (705) 86,045
Research and development costs (6,069) (59) (6,128)
Other operating costs (45,157) (490) (45,647)
Share of profit of equity-accounted investees,
net of tax (32) - (32)
=============================================== =========== ============= =========
Adjusted EBITDA 35,492 (1,254) 34,238
Exceptional - restructuring, acquisition and
disposal related items (3,904) (3,913) (7,817)
=============================================== =========== ============= =========
EBITDA 31,588 (5,167) 26,421
Depreciation and impairment (18,409) (304) (18,713)
Amortisation and impairment (18,495) - (18,495)
=============================================== =========== ============= =========
Operating loss (5,316) (5,471) (10,787)
Net finance costs (7,378) (34) (7,412)
=============================================== =========== ============= =========
Loss before taxation (12,694) (5,505) (18,199)
Tax on loss (3,365) - (3,365)
=============================================== =========== ============= =========
Loss after tax for the financial period (16,059) (5,505) (21,564)
=============================================== =========== ============= =========
Impact on the Group Consolidated Income Statement for the year
ended 30 September 2022
2022 2022 2022
Continuing Discontinued Total
Restated Restated Restated
GBP000 GBP000 GBP000
=============================================== =========== ============= =========
Revenue 157,707 570 158,277
Cost of sales (73,777) (1,372) (75,149)
=============================================== =========== ============= =========
Gross profit 83,930 (802) 83,128
Research and development costs (6,634) (57) (6,691)
Other operating costs (44,095) (566) (44,661)
Share of profit of equity-accounted investees,
net of tax (595) - (595)
=============================================== =========== ============= =========
Adjusted EBITDA 32,606 (1,425) 31,181
Exceptional - restructuring, acquisition and
disposal related items 16 - 16
=============================================== =========== ============= =========
EBITDA 32,622 (1,425) 31,197
Depreciation and impairment (19,692) (205) (19,897)
Amortisation and impairment (19,161) - (19,161)
=============================================== =========== ============= =========
Operating loss (6,231) (1,630) (7,861)
Net finance costs (15,152) (164) (15,316)
=============================================== =========== ============= =========
Loss before taxation (21,383) (1,794) (23,177)
Tax on loss (7,268) (6) (7,274)
=============================================== =========== ============= =========
Loss after tax for the financial period (28,651) (1,800) (30,451)
=============================================== =========== ============= =========
Effects of business disposals on the financial position of the
Group
On 30 September, the tilapia businesses of a Group's subsidiary
was disposed of for consideration of USD 1. The assets sold are
highlighted in the table below.
Tilapia
GBP000
============================================================== =======
Assets
Property, plant and equipment (including Right of use assets) 738
Intangible assets 3,036
============================================================== =======
Net assets and liabilities 3,774
============================================================== =======
Total consideration -
Consideration received in cash -
Cash and cash equivalents disposed of -
============================================================== =======
Net cash inflow/(outflow) -
============================================================== =======
6. 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.
2023 2022
================================== ================================== ==================================
Continuing Discontinued Total Continuing Discontinued Total
================================== ========== ============ ======== ========== ============ ========
Loss attributable to equity
holders of the parent (GBP000) (17,641) (5,505) (23,146) (30,287) (1,800) (32,087)
Weighted average number of shares
in issue (thousands) 731,935 698,233
Basic loss per share (pence) (2.41) (0.75) (3.16) (4.34) (0.26) (4.60)
---------------------------------- ---------- ------------ -------- ---------- ------------ --------
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 8,948,132 (2022: 6,240,304) potential ordinary shares
have not been included within the calculation of statutory diluted
loss per share for the year as they are anti-dilutive and reduce
the loss per share. However, these potential ordinary shares could
dilute earnings per share in the future. The diluted and basic loss
per share are the same for both continuing and discontinued.
7. 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 2021 63,027 1,807 6,421 32,893 2,751 106,899
Additions 4,025 1,616 283 4,546 338 10,808
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
Transfer to inventory - - - (1,514) - (1,514)
Disposals (224) - - (131) (126) (481)
Disposals through sale of
subsidiary - - - - - -
================================= ========== ================ ============= ============== ============= =======
Balance at 30 September 2022 69,003 2,264 7,136 39,166 3,138 120,707
--------------------------------- ---------- ---------------- ------------- -------------- ------------- -------
Balance at 1 October 2022 69,003 2,264 7,136 39,166 3,138 120,707
Additions 2,164 560 28 2,662 539 5,953
On acquisition - - - 315 - 315
Reclassification 56 (106) - 50 - -
Increase/(decrease) through
transfers
from
assets in the course of
construction 877 (1,556) - 679 - -
Exchange differences (4,446) (53) (344) (1,670) (328) (6,841)
Transfer to assets held for sale (1,392) - - - - (1,392)
Transfer from inventory - - - 94 - 94
================================= ========== ================ ============= ============== ============= =======
Balance at 30 September 2023 66,181 1,109 5,245 39,175 3,291 115,001
--------------------------------- ---------- ---------------- ------------- -------------- ------------- -------
Accumulated depreciation
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
--------------------------------- ---------- ---------------- ------------- -------------- ------------- -------
Balance at 1 October 2022 10,924 - 5,176 21,315 1,392 38,807
Depreciation charge for the year 2,266 - 79 5,513 595 8,453
Transfer to assets held for sale (542) - - - - (542)
Exchange differences (908) - (189) (810) (214) (2,121)
Disposals (81) - (1,575) (1,323) (28) (3,007)
--------------------------------- ---------- ---------------- ------------- -------------- ------------- -------
Balance at 30 September 2023 11,659 - 3,491 24,695 1,745 41,590
--------------------------------- ---------- ---------------- ------------- -------------- ------------- -------
Net book value
================================= ========== ================ ============= ============== ============= =======
At 30 September 2023 54,522 1,109 1,754 14,480 1,546 73,411
================================= ========== ================ ============= ============== ============= =======
At 30 September 2022 58,079 2,264 1,960 17,851 1,746 81,900
================================= ========== ================ ============= ============== ============= =======
At 1 October 2021 55,198 1,807 1,698 18,087 1,990 78,780
--------------------------------- ---------- ---------------- ------------- -------------- ------------- -------
8. Leases
Group
2023 2022
Right-of-use-assets GBP000 GBP000
============================== ======= =======
Leasehold property 9,213 9,389
Plant and machinery 10,585 17,582
Office equipment and fixtures 6 63
============================== ======= =======
19,804 27,034
------------------------------ ------- -------
2023 2022
Lease liabilities GBP000 GBP000
============================== ======= =======
Current 11,567 11,522
Non-current 8,293 14,765
============================== ======= =======
19,860 26,287
------------------------------ ------- -------
2023 2022
Depreciation charge of right-of-use assets GBP000 GBP000
==================================================== ======= =======
Leasehold property 1,210 1,383
Plant and machinery 9,038 9,176
Office equipment and fixtures 12 72
==================================================== ======= =======
10,260 10,631
==================================================== ======= =======
2021 2020
Additional information GBP000 GBP000
==================================================== ======= =======
Additions to right-of-use assets 2,120 497
Modifications to right-of-use assets 1,697 10,884
Impairment of leasehold property right-of-use asset - 664
Interest expense 1,654 1,744
Expense relating to short-term leases 237 152
Expense relating to leases of low-value leases 20 151
Total cash outflow for leases 9,438 10,533
---------------------------------------------------- ------- -------
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 GBP8,405,000 of the
net book value and GBP9,374,000 of the lease liability at the year
end.
9. 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
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
----------------- -------- -------- ---------- ------------ -------- --------- -------- -------- ----------- --------
Balance at 1
October
2022 447 164,674 452 160,407 6,378 6,575 40,320 23,235 31,222 433,710
Additions - on
acquisition - - - - - - - - - -
Additions -
externally
acquired 80 1 115 - - - - - - 196
Additions -
internally
developed - - - - - - - - 632 632
Disposals - (3,036) (21) - - - (150) - - (3,207)
Reclassification
to assets held
for resale - - - - - - - - - -
Exchange
differences (15) (13,682) (1) (13,737) (559) (70) (3,186) (1,267) (982) (33,499)
================= ======== ======== ========== ============ ======== ========= ======== ======== =========== ========
Balance at 30
September 2023 512 147,957 545 146,670 5,819 6,505 36,984 21,968 30,872 397,832
----------------- -------- -------- ---------- ------------ -------- --------- -------- -------- ----------- --------
Accumulated
amortisation
and impairment
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 2,027 636 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
----------------- -------- -------- ---------- ------------ -------- --------- -------- -------- ----------- --------
Balance at 1
October
2022 143 49,950 206 104,386 1,656 6,293 16,943 4,886 3,983 188,446
Amortisation
charge
for the period 85 - 91 12,605 222 94 1,818 606 2,437 17,958
Impairment - 1 - 61 - - 476 - - 538
Disposals - - (21) - - - (150) - - (171)
Exchange
differences (4) (4,484) (2) (8,868) (143) (52) (1,177) (253) (33) (15,016)
================= ======== ======== ========== ============ ======== ========= ======== ======== =========== ========
Balance at 30
September 2023 224 45,467 274 108,184 1,735 6,335 17,910 5,239 6,387 191,755
----------------- -------- -------- ---------- ------------ -------- --------- -------- -------- ----------- --------
Net book value
At 30 September
2023 288 102,490 271 38,486 4,084 170 19,074 16,729 24,485 206,077
================= ======== ======== ========== ============ ======== ========= ======== ======== =========== ========
At 30 September
2022 304 114,724 246 56,021 4,722 282 23,377 18,349 27,239 245,264
================= ======== ======== ========== ============ ======== ========= ======== ======== =========== ========
At 1 October 2021 252 98,697 205 59,660 4,105 392 21,402 18,525 25,802 229,040
----------------- -------- -------- ---------- ------------ -------- --------- -------- -------- ----------- --------
The table below provides further detail of intangibles and their
remaining amortisation period.
Remaining
NBV 2023 NBV 2022 life
Description Category GBP000 GBP000 2023
=========================================== ================ =================== =================== =========
Acquisition of INVE in 2015
Goodwill Goodwill 79,909 87,585 -
Harvesting rights Licences 19,029 22,449 12
Intellectual
Product technology property - 446 -
Intellectual
Product rights property 24,880 39,390 2
Intellectual
Brand names property 10,945 12,976 12
Intellectual
In-process R&D property 535 847 2
Customer relationships Customer lists 4,085 4,723 18
=========================================== ================ =================== =================== =========
Total relating to acquisition of INVE 139,383 168,416 -
============================================================= =================== =================== =========
Acquisition of Salmobreed AS (Now part
of Benchmark Genetics Norway AS) in 2014
Goodwill Goodwill 6,063 6,523 -
Genetic material and breeding nuclei Genetics 8,926 9,911 31
=========================================== ================ =================== =================== =========
Total relating to acquisition of Salmobreed AS 14,989 16,434 -
============================================================= =================== =================== =========
Acquisition of Stofnfiskur( Now Benchmark
Genetics Iceland) in
2014
Goodwill Goodwill 11,999 12,467 -
Genetic material and breeding nuclei Genetics 7,598 8,147 31
=========================================== ================ =================== =================== =========
Total relating to acquisition of Stofnfiskur 19,597 20,614 -
============================================================= =================== =================== =========
Acquisition of Akvaforsk Genetics Center
AS (Now part of
Benchmark Genetics Norway AS) in 2015
Goodwill Goodwill 4,520 7,348 -
Licences Licences - 292 -
Contracts Contracts 170 282 2
=========================================== ================ =================== =================== =========
Total relating to acquisition of Akvaforsk Genetics
Center AS 4,690 7,922 -
============================================================= =================== =================== =========
Capitalised development costs
Development
Ectosan(R)Vet/CleanTreat(R) costs 14,048 15,840
8
Not yet
Development ready
Live food alternative diets costs 3,879 4,115 for use
Development
SPR Shrimp costs 5,453 6,686 8
=========================================== ================ =================== =================== =========
Total capitalised development costs 23,380 26,641
============================================================= =================== =================== =========
Intellectual
Other purchased material intangible assets Property 1,408 1,497 16
=========================================== ================ =================== =================== =========
Total relating to other purchased intangible assets 1,408 1,497
============================================================= =================== =================== =========
Other individually immaterial goodwill and intangibles 2,630 3,740
============================================================= =================== =================== =========
Total net book value at 30 September 206,077 245,264
============================================================= =================== =================== =========
10. 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. 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 Total
2023 2023 2023
GBP000 GBP000 GBP000
====================================================== ======== ============== ========
Benchmark Genetics AS 6,062 - 6,062
Benchmark Genetics Iceland HF (Previously Stofnfiskur
HF) 11,999 - 11,999
Akvaforsk Genetic Center* 4,520 - 4,520
INVE Aquaculture Group - 79,909 79,909
====================================================== ======== ============== ========
Goodwill 22,581 79,909 102,490
====================================================== ======== ============== ========
Development costs - 3,879 3,879
====================================================== ======== ============== ========
* 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 Total
2022 2022 2022
GBP000 GBP000 GBP000
======================================================
Benchmark Genetics AS 6,522 - 6,522
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 27,139 87,585 114,724
====================================================== ========== =============== ========
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).
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.
Genetics
The pre-tax cashflows from the five-year projections were
discounted using a pre-tax discount rate of 15.7% (2022: 14.7%).
CAGR of revenue of 9% (2022: 15%) is implied by the five-year plan
and a long-term growth rate of 2.5% (2022: 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 16.4% (2022: 15.6%).
CAGR of revenue of 12% (2022: 10%) is implied by the five-year plan
and a long-term growth rate of 3.5% (2022: 3.5%) has been used to
extrapolate the terminal year cashflow into perpetuity. Market
analysis reports predict long-term growth rates of c.5.0%, and the
health benefits of shrimp are still very much in evidence.
Management believes that a long-term growth rate of 3.5% represents
both a prudent and consistent approach for the CGU.
Sensitivity analysis has been performed on the key assumptions.
Reducing the forecast growth rates for less mature parts of the CGU
within Health and Diets products did not result in elimination of
headroom. However, the forecasts growth rates for the CGU include
an assumption around the ongoing recovery in global shrimp markets,
and if that recovery is slower than the forecasts anticipate, due
to factors such as continued reduced end market demand for Shrimp,
to the extent that the CAGR of revenue implied over the five-year
plan falls to 9%, this would result in a potential impairment.
The sensitivity to movements in the terminal growth rate and
discount rate were also assessed, and a reduction in terminal
growth rate from 3.5% to 1.5%, or an increase in the discount rate
from 16.4% to 18.4%, either of which are considered to be
reasonably possible, would reduce the headroom on the Advanced
Nutrition CGU of GBP31.6m to nil. Should the growth rate reduce or
discount rate increase further than this, then an impairment would
be likely.
Health
The pre-tax cashflows from the five-year projections were
discounted using a pre-tax discount rate of 17.4% (2022: 16.4%). An
assumed CAGR of revenue of 23% (2022: 27%) 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% (2022: 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.
11. Biological assets
Book value of biological assets recognised at fair value
2023 2022
Group GBP000 GBP000
===================================== ============ ============
Salmon eggs 10,631 14,037
Salmon broodstock 33,411 30,501
Salmon milt 796 606
Lumpfish fingerlings 757 1,090
Shrimp 397 424
===================================== ============ ============
Total biological assets 30 September 45,992 46,658
===================================== ============ ============
Analysed as
Current 27,586 25,780
Non-current 18,406 20,878
===================================== ============ ============
Total biological assets 30 September 45,992 46,658
===================================== ============ ============
Change in book value of biological assets
2023 2022
GBP000 GBP000
======================================================= ========== ==========
Biological assets 1 October Increase 46,658 38,365
Increase from production 42,393 48,067
Reduction due to sales (40,583) (45,535)
======================================================= ========== ==========
Other movements in biological assets 1,810 4,532
Foreign exchange movement before fair value adjustment (1,562) 1,704
Change in fair value through income statement (103) 1,595
Foreign exchange impact on fair value adjustment (811) 462
======================================================= ========== ==========
Biological assets 30 September 45,992 46,658
======================================================= ========== ==========
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
2023 2022
GBP000 GBP000
======================================================= =========== ===========
Biological assets 1 October 30,501 26,700
Increase from production 25,494 28,720
Transfer to salmon eggs following harvesting (22,677) (26,509)
Foreign exchange movement before fair value adjustment (1,199) 1,326
Change in fair value through income statement 1,853 (31)
Foreign exchange impact on fair value adjustment (561) 295
======================================================= =========== ===========
Biological assets 30 September 33,411 30,501
======================================================= =========== ===========
Significant unobservable inputs used in the valuation of salmon
broodstock
2023 2022
============================================== ======= =======
Number of eggs valued in broodstock (m units) 250 222
Average selling price per egg (GBP) 0.131 0.135
Future costs per egg (GBP) (0.016) (0.021)
---------------------------------------------- ------- -------
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 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 GBP2,150,000 of
broodstock in Chile. As at 30 September the gross carrying amount
was GBP5,186,000 (2022: GBP4,704,000) and the accumulated
impairment losses were GBP3,036,000 (2022: GBP2,735,000).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 the assumed selling price per
egg would increase/decrease the fair value of salmon broodstock and
eggs by GBP440,000. 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
GBP4,404,000.
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:
2023 2022
===================== ============ ============
Salmon eggs 334.7m units 291.1m units
Lumpfish fingerlings 1.5m units 2.0m units
--------------------- ------------ ------------
Total quantities held at 30 September were:
2023 2022
===================== ============ ============
Salmon eggs 85.6m units 103.9m units
Salmon broodstock 1,517 tonnes 1,737 tonnes
Lumpfish fingerlings 0.4m units 0.7m units
--------------------- ------------ ------------
12. Trade and other receivables
2023 2022
Group GBP000 GBP000
============================================================ =========== =========
Trade receivables 27,460 31,218
Less: provision for impairment of trade receivables (2,612) (2,748)
============================================================ =========== =========
Trade receivables - net 24,848 28,470
============================================================ =========== =========
Total financial assets other than cash and cash equivalents
measured at amortised cost 24,848 28,470
Other receivables - contingent consideration - 887
============================================================ =========== =========
Total financial assets other than cash and cash equivalents
classified as measured at fair value through
profit and loss - 887
Prepayments 18,081 14,989
Other receivables 16,866 12,031
============================================================ =========== =========
Total trade and other receivables 59,795 56,377
============================================================ =========== =========
Other receivables relate to the following items: VAT recoverable
GBP4,353,000 (2022: GBP4,386,000), research and development
expenditure tax credits and similar items GBP157,000 (2022:
GBP154,000), the right to receive an agreed proportion of a key
supplier's harvest* GBP10,173,000 (2022: GBP5,249,200), accrued
income of GBP1,177,000 (2022: GBP1,377,000) and other amounts
receivable of GBP1,006,000 (2022: GBP865,000).
*A financial liability of GBP10,173,000 (2022: GBP5,249,200) 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 GBP10,173,000
(2022: GBP5,249,200) 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
related to contingent consideration outstanding from the disposal
of Improve International Limited in FY20. This related to deferred
cash consideration dependent on the delivery of certain future
revenues in the financial year ended 30 September 2022 and the fair
value was derived from the likely receivable amount based on
expectations of performance against the targets. The amount
recovered in the financial year ended 30 September 2023 was not
materially different to management's estimate.
The fair values of trade and other receivables measured at
amortised cost are not materially different to their carrying
values. As at 30 September 2023 trade receivables of GBP6,313,000
(2022: GBP5,943,000) were past due but not impaired. They relate to
customers with no default history. The ageing analysis of these
receivables is as follows:
2023 2022
GBP000 GBP000
======================= ======== =======
Up to 3 months overdue 5,480 5,761
3 to 6 months overdue 833 218
6 to 12 months overdue - (36)
======================= ======== =======
6,313 5,943
======================= ======== =======
Movements on the Group provision for impairment of trade
receivables are as follows:
2023 2023
GBP000 GBP000
================================ ======== ========
At 1 October 2,748 2,493
Provided during the year 696 281
Unused provisions reversed (600) (180)
Provisions used during the year (32) -
Foreign exchange movements (200) 154
================================ ======== ========
At 30 September 2,612 2,748
-------------------------------- -------- --------
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.
13. Trade and other payables
2023 2022
Group GBP000 GBP000
=========================================================== ======== ========
Trade payables 26,657 22,149
Other payables 2,213 1,127
Accruals 16,257 17,636
Other payables - tax and social security payments 2,957 3,799
=========================================================== ======== ========
Financial liabilities, excluding loans and borrowings,
classified as financial liabilities measured at amortised
cost 48,084 44,711
Financial contracts - hedging instrument 5,683 8,012
=========================================================== ======== ========
Financial liabilities, excluding loans and borrowings,
classified as financial liabilities at fair value through
profit or loss 5,683 8,012
Deferred income 404 597
=========================================================== ======== ========
Total trade and other payables 54,171 53,320
Less: non-current portion of other payables (6,842) (8,996)
=========================================================== ======== ========
Current portion 47,329 44,324
----------------------------------------------------------- -------- --------
Book values approximate to fair value at 30 September 2023 and
2022.
Of the financial contracts GBP6,155,000 (2022: GBP8,387,000)
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 unsecured 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.
14. Loans and borrowings
Group
2023 2022
GBP000 GBP000
============================= ======== ========
Non-Current
2025 750m NOK Loan notes 57,604 61,976
Bank borrowings 16,799 17,226
Unamortised debt issue costs (742) (922)
Lease liabilities 8,293 14,765
============================= ======== ========
81,954 93,045
============================= ======== ========
Current
Bank borrowings 9,320 5,569
Unamortised debt issue costs (842) -
Lease liabilities 11,567 11,522
============================= ======== ========
20,045 17,091
============================= ======== ========
Total loans and borrowings 101,999 110,136
============================= ======== ========
At 30 September 2023 the fair value of the unsecured floating
rate listed green bond of NOK 750m was NOK 791m.
On 21 November 2022, the Group refinanced its 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.
Benchmark Genetics Salten AS had the following loans (which are
ring-fenced debt without recourse to the remainder of the Group) at
30 September 2023:
-- Term loan with a balance of NOK 171.9m provided by Nordea
Bank Norge Abp. The loan is a five-year term loan maturing no later
than January 2028 at an interest rate of 2.5% above three-month
NIBOR. This loan refinanced the previous term loan from the same
bank when the outstanding balance of NOK 162 million was repaid in
February 2023.
-- NOK 20.0m 12-month working capital facility provided by
Nordea Bank Norge Abp. This was undrawn at 30 September 2023 (2022:
undrawn).
-- Term loan with a balance of NOK 35.5m (2022: NOK 40.1m)
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 2023 was 7.45%. The interest rate on this loan is
variable.
-- A new term loan with a balance of NOK 10.0m provided by
Innovasjon Norge. The loan is a 15-year term loan maturing in July
2038. The interest rate on this loan at 30 September 2023 was
7.45%. The interest rate on this loan is variable.
-- NOK 21.75m loan provided by Salten Stamfisk AS (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.
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:
2023 2022
GBP000 GBP000
---------------- -------- --------
Sterling 16,680 19,697
Norwegian Krone 76,730 81,634
Thai Baht 464 954
Euro 614 272
US Dollar 6,460 6,888
Icelandic Krone 585 545
Other 466 146
================ ======== ========
101,999 110,136
================ ======== ========
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END
FR BKLBLXFLBFBV
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November 29, 2023 02:00 ET (07:00 GMT)
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