Benchmark Share Discussion Threads

[nedelcu77] 24/5/2019 12:43

Not necessarily, what they lose through fewer nutrition products might be partially offset by the sell of genetic material ie more eggs.

[rivaldo] 24/5/2019 12:15

Big problems with huge algae blooms in Norway (and Scotland) across their fish farms:



Not a holder, but wouldn't have thought this would be good news for BMK and its sales of salmon-related products?

[btfd497] 17/5/2019 13:09

I have been waiting for 18months for this to go up after failing to sell when it increased by 80%(greed ehy). I have faith it’ll shoot up
Very quickly when it does.

[edwardt] 16/5/2019 15:58

pigs are flying at genus - can fish fly here too pls!

[edwardt] 09/5/2019 13:04

sod it, i have bought a few . too good a narrative on a multi year basis to ignore.

[napoleon 14th] 01/4/2019 17:04

outsize - you're right, & I'm happy I didn't "revisit this old girlfriend", deciding to wait rather than buy last Jan or so. BMK needs some hard headed business peeps to make the assets sweat and produce decent ebitda at last...
For now it's a biz. for scientific boffins and romantics.

As for today's price action......OUCH!

[outsizeclothes.com] 26/2/2019 12:50

And if it's being amortised through the P&L, but there's little ACTUAL, POSITIVE cash flow being generated ???

[ilovefrogs] 22/2/2019 16:42

Importance of goodwill simply reflects whether a business is capital intensive or not. If you buy a business with low capital intensity because it's a service business, or the value is in the brand, then you have to pay a load of goodwill. This then has to be amortised through the P@L over time, but you add it back when considering cash flow.

[outsizeclothes.com] 22/2/2019 16:02

btw, the chart says that if 50p does not hold on an "end of week", it's very clear air down to 38p with little or no support.
If 50p does manage to hold for a week, the immediate upside target becomes 60p

[outsizeclothes.com] 21/2/2019 12:27

My view on the treatment of balance sheet goodwill appears to be different to ilovefrogs and edwardt. In my opinion, if you buy a business for CASH that includes a lot of goodwill in the transaction, and then write off that goodwill, it shows that you paid too much in the first place.
Even if it afterwards becomes a "balance sheet exercise" that "does not affect the Company's actual cash" the Company has the debt incurred with the initial purchase, and carried, that has to be repaid with interest.
Having written off £18m, it begs the questions "how much more is to write off?" and "how big a blunder did you make?"

Basically, having to write off goodwill at all means, to me, management have overpaid for the goodwill they bought, as it's now obviously not worth the amount they paid.

[edwardt] 19/2/2019 13:33

fair enough but last time i looked return on capital employed is only 2% for bmk it should be near 20 to 25%. Mgmt have had too supportive a share register - tick tock -time to work hard what you got or risk getting the slot would be my message to the board!

[ilovefrogs] 18/2/2019 17:32

Goodwill is just accounting. It doesn't affect cashflow which is ultimately what drives dividends. Most companies provide adjusted profits which strip out goodwill quite rightly. After all, if you're in a low capital intensity business and acquisitive, you always have goodwill on the balance sheet as the tangible assets of any purchase are negligible. I certainly wouldn't focus on this for benchmark.

[murdo mcsponge] 13/2/2019 15:49

Well someone likes the stock enough to buy around £400,000 worth of shares.

[murdo mcsponge] 11/2/2019 12:56

Thanks very much Outsize. A really valuable comment which I will RML&ID "read, mark, learn and inwardly digest". It's an extremely constructive post of which there are all too few on these boards. Thank you again. Murdo

[outsizeclothes.com] 11/2/2019 12:42

Hi Murdo.
I see potentially revolutionary technologies, but unless you can build immediate increases in revenue of large magnitude, buying "goodwill" which has to be written off at over 10% p.a. of turnover ( £18m vs £151m ) to me shows that "you can buy gold too dear" and that perhaps they have greatly overpaid for potential that their sales teams have so far not delivered.
Depreciation I also find high relative to turnover.

As for how I would have got them to where they are at - Maybe a bigger effort in selling what they already had, rather than loading up with debt running ahead of themselves to get new stuff when their existing product sales aren't making free cash flow.

It will be interesting to see how much sales have increased now that the new sea-lice free salmon are available. If I did not see 25%-30% (£200m-£230m) revenue next year, WITHOUT an increase in cost of sales, I would, if I were an existing shareholder rather than a potential shareholder, question the ability of their sales team.

[murdo mcsponge] 08/2/2019 13:18

Outsize, I would also point out that aquaculture has proven,over many many years, to be EXTREMELY high risk on the biological front(and on other fronts as well!). The only way to manage these risks is to develop apropriate technologies, which is why I think the high level of investment they are putting in, is fully justified and will pay off bigtime.

[murdo mcsponge] 08/2/2019 13:09

Thanks outsize. You point out things that financial in-experts like me fail to see. However, I know the aquaculture industry pretty well from a risk management point of view, and from that aspect I see a Company that is making all the right moves to hit on the head a lot of problems (particularly lice in Salmon, which has cost the industry millions and millions, not to mention shrimp diseases, which are as economically disastrous as S lice.).

I believe BMK are uniquely set up to fulfil/meet the risk management role/needs aquaculture requires. The industry is expanding very fast and needs what they've got - in spades. To meet what the industry wants and needs, I think they have to pursue the course they have adopted - spend hard to get the right products, people, and services. I guess the gamble is whether sales and profit margins will justify the risk. In my view they will, so I look for accelerated growth in revenue and profits.

I respect your critical comments from a financial viewpoint, but I sometimes wonder if many successful businesses would ever have got off the ground without taking big risks - which analysis like yours highlight. Surely, that's what business building is all about.
The question I would like to ask you is this: How would you have got to where BMK is, but avoiding what you see as the shortcomings in their balance sheet?

[outsizeclothes.com] 08/2/2019 10:45

I think it's perfectly visible, but that would be investors are looking at what the accounts actually say. Greatly increased debt to a third of revenue, £9m operating loss, a huge "goodwill" value stuck in the middle of the Intangibles, increased depreciation, and running to the bank for $20m extra borrowing headroom.
All this with revenue only rising 8%.
Breakeven is ages away.
Net profit even farther away.
Dividends? - possibly in 10 years time.
You are more likely to see a fund-raising to cut debt before that, especially if we have another "bad shrimp year".
And that's what the "City money men" are seeing.

As a reminder:-

----------------------------------------- ------- -------
Revenue 151.5 140.2
Cost of sales (77.5) (77.8)
----------------------------------------- ------- -------
Gross profit 74.0 62.4
Research and development costs (12.0) (13.1)
Other operating costs (44.6) (39.2)
Depreciation (6.8) (4.9)
Amortisation of capitalised development - -
costs
Share of profit of equity-accounted
investees, net of tax (0.4) 0.0
Adjusted Operating Profit 10.2 5.2
----------------------------------------- ------- -------
Exceptional including acquisition
related items (1.2) 5.6
Amortisation of intangible assets
excluding development costs (18.1) (18.4)
----------------------------------------- ------- -------
Operating Loss (9.1) (7.6)
----------------------------------------- ------- -------


Net debt 2018 2017
GBPm GBPm
--------------------------- ------- -------
Cash and cash equivalents 24.1 18.8
--------------------------- ------- -------
Bank borrowings and other
loans - current (0.9) (6.0)
Obligations under finance
leases - current - (0.2)
--------------------------- ------- -------
(0.9) (6.2)
--------------------------- ------- -------
Bank borrowings and other
loans - non-current (78.9) (36.5)
Net debt 55.7 23.9
--------------------------- ------- -------

[murdo mcsponge] 05/2/2019 14:32

Unfortunately tinman, I think you are absolutely spot on. I guess Ferd will bid for the Company at some point, and the main shareholders will throw in the towel, and another British business will get sold off by the City "money men" who, as we all know, would sell ther own daughters if the price was right.

[tinman] 05/2/2019 13:49

Agree with Murdo, BMK unloved by retail investors due to 'invisibility'

My prediction is the Norwegians will take it private..

[murdo mcsponge] 05/2/2019 10:40

Edmonds. The trouble with BMK is that nobody knows about it. In my opinion it's a terrific, and unique, Company,which is doing all the right things, in an industry that is one of the fastest growing "agri" markets in the World. Its stock oprice should be far higher IMHO.

[edmonda] 05/2/2019 08:46

after FY results showed progress in all divisions and Group revs up 8%, a full research update just published by Equity Development with increase in fair value to nearly twice current share price.

Note is freely accessible here: