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BMK Benchmark Holdings Plc

43.00
-1.50 (-3.37%)
Last Updated: 08:00:12
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Benchmark Holdings Plc LSE:BMK London Ordinary Share GB00BGHPT808 ORD 0.1P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  -1.50 -3.37% 43.00 43.00 45.90 43.00 43.00 43.00 1,030 08:00:12
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Pharmaceutical Preparations 169.74M -23.15M -0.0313 -13.74 317.92M

Benchmark Holdings PLC Q4 Results (6167X)

20/12/2019 7:01am

UK Regulatory


Benchmark (LSE:BMK)
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TIDMBMK

RNS Number : 6167X

Benchmark Holdings PLC

20 December 2019

20 December 2019

Information within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulations (EU) No. 596/2014.

Benchmark Holdings plc

("Benchmark", the "Company" or the "Group")

Q4 Results

(3 months ended 30 September 2019)

In compliance with the terms of its senior secured bond which require the Company to publish quarterly financial information, Benchmark, the aquaculture health, nutrition and genetics business, announces its unaudited results for the 3 months ended 30 September 2019 (the "period"). All Q4FY19 figures quoted in this announcement are based on unaudited accounts.

This morning the Company published its full year audited results for the 12 months ended 30 September 2019 which can be found on https://www.benchmarkplc.com/investors

 
 GBPm                                   Q4 2019       Q42018       %        YTD 2019      Restated* 
                                        unaudited    unaudited             (Full year)     YTD 2018 
                                                                                          (Full year) 
------------------------------------  -----------  -----------  -------  -------------  ------------- 
 Adjusted 
------------------------------------  -----------  -----------  -------  -------------  ------------- 
 Adjusted EBITDA(2) from continuing 
  operations                              7.5          7.0        6.8         12.1           19.1 
------------------------------------  -----------  -----------  -------  -------------  ------------- 
 EBITDA(1) from continuing 
  operations                              6.9          6.7        4.2         11.5           17.8 
------------------------------------  -----------  -----------  -------  -------------  ------------- 
 Adjusted Operating Profit(3) 
  from continuing operations              3.7          5.5       (31.4)       3.6            14.2 
------------------------------------  -----------  -----------  -------  -------------  ------------- 
 Statutory 
------------------------------------  -----------  -----------  -------  -------------  ------------- 
 Revenue from continuing operations       37.0         33.6       10.0       127.3          131.6 
------------------------------------  -----------  -----------  -------  -------------  ------------- 
 Loss before tax from continuing 
  operations                             (53.7)       (1.0)                  (73.3)         (8.4) 
------------------------------------  -----------  -----------  -------  -------------  ------------- 
 (Loss)/profit for the period 
  from continuing operations             (53.2)       (1.1)                  (73.3)          0.5 
------------------------------------  -----------  -----------  -------  -------------  ------------- 
 
   Loss for the period - total 
   incl. discontinued operations         (61.5)       (2.3)                  (83.1)         (4.4) 
------------------------------------  -----------  -----------  -------  -------------  ------------- 
 
 Basic loss per share (p)               (11.07)       (0.51)                (15.03)          (0.94) 
------------------------------------  -----------  -----------  -------  -------------  ------------- 
 
 Net debt(4)                             (87.1)        (55.7)                (87.1)          (55.7) 
------------------------------------  -----------  -----------  -------  -------------  ------------- 
 

* 2018 numbers have been restated to reflect the ongoing continuing business. Knowledge Services Division and the veterinary services business within the Animal Health Division have been moved to discontinued operations in line with IFRS 5.

Q4 Overview

-- As announced in the trading update of 29 November, the Company has accelerated its programme of disposals and restructuring, and as a result, certain activities, primarily the Knowledge Services division and the veterinary services business in Animal Health, have been classified as discontinued operations.

-- Revenue from continuing operations of GBP37.0m was 10% above the prior year (Q4 2018: GBP33.6m) driven by strong growth in Genetics versus the same period last year.

-- Adjusted EBITDA(2) from continuing operations was up 7% at GBP7.5m (Q4 2018: GBP7.0m), driven by increased revenues in the period vs the prior year.

-- Adjusted EBITDA(2) margin 20% (Q4 2018: 21%) with growth in gross profit offset by step up in operating costs

-- Impairment of acquired intangibles in Advanced Nutrition of GBP44.8m as a result of a reduction in forecasts due to a material change in market outlook (impairing INVE).

   --    Impairment of tangible and intangible assets related to discontinued operations of GBP6.9m 

-- Statutory loss for the period including discontinued operations of GBP61.5m (2018: loss of GBP2.3m), primarily as a result of the impairments (including discontinued operations); as well as an increase in depreciation, amortisation, finance costs and exceptional costs

   --    The weakness in the shrimp and sea bass/sea bream markets continued during the period. 

Q4 Divisional overview

-- Genetics reported revenue growth of 60% against Q4 last year as a result of higher salmon egg sales supported by the Salten facility coming onstream and the export ban of all salmon eggs from Norway which benefitted StofnFiskur in the period. Revenues in the quarter were GBP10.0m (2018: GBP6.2m). Adjusted EBITDA for the division was GBP4.3m (Q42018: GBP3.3m).

-- Advanced Nutrition delivered revenues of GBP22.3m (Q42018: GBP21.5m), as a result of higher GSL Artemia volumes, the launch of D-FENSE vibrio inhibiting Artemia in Vietnam and higher volumes in Health, partly offset by lower volumes of non GSL eggs and lower Diets sales mainly in Greece. Adjusted EBITDA was 18% up at GBP4.5m (Q42018: GBP3.8m) helped by one off income from the settlement of infringement cases and the profit on disposal of a property in China which together totalled GBP1.1m.

-- Revenues in Animal Health (including Discontinued Operations of veterinary and diagnostics) in Q4 were GBP6.6m, 13% below the prior year (Q42018: GBP7.6m) as a result of lower contribution from field trials partially offset by higher toll manufacturing contribution (timing) and higher Salmosan sales and Adjusted EBITDA was a loss of GBP0.8m (Q42018: loss GBP0.4m).

Full Year Overview

This morning the Company published its full year audited results for the 12 months ended 30 September 2019 which can be found on https://www.benchmarkplc.com

   --    Revenues from Continuing Operations of GBP127.3m, 3% below prior year (2018: GBP131.6m) 

-- Total revenues including Continuing and Discontinued Operations of GBP148.7m, down 2% (2018: GBP151.5m)

   --    Adjusted EBITDA(2) from Continuing Operations of GBP12.1m (2018: GBP19.1m) 

-- Total Adjusted EBITDA(2) including Continuing and Discontinued Operations of GBP13.7m (2018: GBP17.0m)

-- Total R&D investment of GBP20.5m (2018: GBP19.2m) driven by products close to launch and investment in Genetics and Advanced Nutrition to maintain leadership in our core markets

-- Net debt(3) at period end of GBP87.1m (2018: GBP55.7m) as a result of investment in R&D and an increase in working capital including that related to growth in biological assets in the new production facilities

   --    Year end liquidity(5) was GBP28.2m, well within the covenant threshold 

-- Impairment of acquired intangibles in Advanced Nutrition of GBP44.8m as a result of a reduction in forecasts due to a material change in market outlook (impairing INVE).

   --    Impairment of tangible and intangible assets related to discontinued operations of GBP7.5m 

-- Current trading: Weakness in the shrimp and sea bass/sea bream markets continues and while some recovery is expected, it is unlikely to recover to 2018 levels in 2020. Overall the Company expects to deliver underlying Adjusted EBITDA from Continuing Operations (before one-off other income) in line with this year in FY2020 and to maintain sufficient liquidity to execute its product development programme and support its Continuing Operations after taking account of the expected timing and proceeds from the planned disposals and cost reductions

(1) EBITDA is earnings before interest, tax, depreciation and amortisation and impairment.

(2) Adjusted EBITDA is EBITDA(1) , before exceptional items and acquisition related expenditure.

(3) Adjusted Operating Profit is operating loss before exceptional items including acquisition related items and amortisation of intangible assets excluding development costs

(4) Net debt is cash and cash equivalents less loans and borrowings.

(5) Liquidity is defined as undrawn facilities plus cash balances.

Progress towards commercial launch of major products

-- Next generation sea lice treatment (product candidate BMK08) continued to show c.99% efficacy and excellent environmental and animal welfare credentials. In combination with CleanTreat(R), BMK08 is potentially transformative, addressing one of the largest industry challenges.

-- Production of specific pathogen resistant (SPR) shrimp commenced in Florida for export into Asia. Entered into agreement with two partners in Thailand for local multiplication and distribution.

Growth in core markets

-- Opening of state of the art, land-based salmon egg facility in Norway. Ramp-up of production according to plan

-- Establishment of wholly owned local production in Chile following dissolution of JV with AquaChile. Recovery of original investment which will be reinvested in the Chilean operation

-- Increased capacity at production plant in Thailand to meet growing long term demand for the Company's specialist diets

Continued Innovation

-- Winner of Aquaculture Innovation Award for CleanTreat(R), the Company's breakthrough purification system which removes medicinal residues from bath treatments

-- Launch of a new Artemia product (D-FENSE) which reduces the risk of infection from vibrio, one of the main industry challenges affecting shrimp and seabass/seabream

Q4 Management Commentary

Q4 saw a continuation of the trends in Q3, with weak shrimp and Mediterranean seabass/seabream markets having affected sales volumes in Advanced Nutrition; Animal Health delivered lower than anticipated contribution from trials of pre-licence products and Genetics performed well with continued growth in salmon egg sales.

During the period, the Company accelerated its programme of disposals and restructuring, and certain activities were classified as discontinued, primarily the Knowledge Services businesses and the veterinary and diagnostics services business in Animal Health.

Compared to the prior year, the results from Continuing Operations in the quarter reflected good growth in salmon genetics sales, a slightly higher revenue from Advanced Nutrition related to timing of sales, and lower contribution from trials in Animal Health. Revenue from continuing operations was GBP37.0m, 10% above the prior year (Q4 2018: GBP33.6m). Adjusted EBITDA from continuing operations was up 7% at GBP7.5m (Q4 2018: GBP7.0m), driven by higher revenues.

The weak market conditions in Advanced Nutrition resulted in a significant impairment of goodwill on acquisition of INVE of GBP44.8m (2018: GBPnil). Furthermore, there were other impairment charges on assets within discontinued operations of GBP7.5m (2018: GBPnil). As a consequence, the statutory loss for the period including discontinued operations was GBP61.5m (2018: loss GBP2.3m), reflecting an increase in depreciation, amortisation, finance costs and exceptional costs.

In addition, Peter George took over as Executive Chairman following Malcolm Pye's resignation as CEO in August 2019. Septima Maguire joined the Company post period end in November 2019 and was appointed CFO on 20 December 2019.

Advanced Nutrition

Advanced Nutrition delivered revenues of GBP22.3m (Q42018: GBP21.5m), as a result of higher GSL Artemia volumes, the launch of D-FENSE vibrio inhibiting Artemia in Vietnam and higher volumes in Health partly offset by lower volumes of non GSL eggs and lower Diets sales mainly in Greece. Adjusted EBITDA was 18% up at GBP4.5m (Q42018: GBP3.8m) helped by one off income from the settlement of infringement cases and the profit on disposal of a property in China which together totalled GBP1.1m.

Operationally, good progress was made in the launch of D-FENSE vibrio inhibiting Artemia across markets, including ongoing trials in several key markets, and first significant sales delivered. The Company held a customer event in Crete, with seminars attended by representatives from more than 90% of all Mediterranean seabass and seabream hatcheries.

Genetics

Genetics revenues in Q4 were GBP10.0m, 60% above the prior year (2018: GBP6.2m) driven by higher salmon egg sales as a result of the Salten facility coming onstream and the countrywide export ban of salmon eggs from Norway in the period which benefitted StofnFiskur.

Gross profit in the period was favourably impacted by an increase in the fair value of biological assets. Adjusted EBITDA for the division was GBP4.3m (Q42018: GBP3.3m) with the Adjusted EBITDA margin affected by higher operational costs compared to the prior year from new ventures including Benchmark Chile, Salten and the new SPR shrimp operation in Florida. Additionally, we incurred legal fees in the termination of the joint venture and the establishment of the wholly owned subsidiary in Chile in Q4 2019.

Operationally, for the first time the Company was able to supply eggs from its SalmoBreed strain throughout the summer thanks to our new biosecure facility in Salten.

Animal Health

Revenues in Animal Health (including Discontinued Operations of veterinary and diagnostics) in Q4 were GBP6.6m, 13% below the prior year (Q42018: GBP7.6m) as a result of lower contribution from field trials partially offset by higher toll manufacturing contribution (timing) and higher Salmosan sales and Adjusted EBITDA was a loss of GBP0.8m (Q42018: loss GBP0.4m).

Operationally, during the period the Company completed the fourth set of field trials in Norway with BMK08, achieving further efficiency gains for CleanTreat(R) which won the Aqua-Nor Innovation award in August 2019.

Activities in Knowledge Services were classified as discontinued.

Full Year Management Commentary

Revenue and Adjusted EBITDA

Group

The Advanced Nutrition division experienced very challenging market conditions in 2019 that led to a reduction in revenue, which was partially offset by growth in Genetics and as a result Group revenue from continuing operations decreased by 3% to GBP127.3m in the year (2018: GBP131.6m). The reduction in sales meant that Gross Profit from continuing operations decreased to GBP66.0m (2018: GBP68.5m) and Gross Margin remaining steady at 52% (2018: 52%) as prices remained relatively resilient albeit some price weakness was experienced in certain live feed products. In addition, there was a reduced contribution in Health from commercial scale field trials.

Total Group operating costs of continuing operations increased by 10% to GBP40.7m (2018: GBP37.0m). This increase reflects the operating costs of new production sites as they come on stream, increased costs related to currency transfers and a full year impact of increased management headcount to strengthen the Plc and Operations boards. Opex was reduced by other income of GBP1.8m (2018: GBP1.0m), mainly from R&D expenditure credits and proceeds from successful IP infringement cases. Expensed R&D of continuing operations increased to GBP12.8m (2018: GBP12.0m) with the increase being focussed on protecting the market positions of the more mature Genetics and Advanced Nutrition divisions as well as progressing the main pipeline opportunities in Animal Health.

Adjusted EBITDA from continuing operations decreased by 37% to GBP12.1m (2018: GBP19.1m) with the drop driven by lower sales in Advanced Nutrition and lower contribution from commercial scale field trials, offset by an increase in sales and margins in Genetics and one-off other income. Adjusted Operating Profit from continuing operations decreased to GBP3.6m (2018: GBP14.2m) due to the lower trading result combined with increased depreciation charges reflecting the contribution of the recently constructed production assets.

Total revenues (including discontinued operations) were GBP148.7m, down 2% (2018: GBP151.5m). Using the same foreign exchange rates experienced in 2018 (constant currency(1) ) revenue from continuing operations decreased by 3%. Total Adjusted EBITDA (including discontinued operations) decreased by 19% to GBP13.7m (2018: GBP17.0m).

Advanced Nutrition

Revenue of GBP76.8m was down 10% (2018: GBP85.7m) as a result of weak markets and aggressive price competition from CIS Artemia producers after a strong harvest. By product our live feed products were the most affected with volumes and revenues (in USD) down 23%, whilst specialist diets and health showed relative resilience with revenues (in USD) down 5% and 4%, respectively.

Strategically we maintained our prices and our premium positioning, which reflect our technical superiority. The weak demand environment did result in the division absorbing some increases in cost of sales and, while operating costs were tightly controlled and benefitted from the profit on sale of a property and the proceeds of IP infringement settlements, Advanced Nutrition reported a reduced Adjusted EBITDA result of GBP15.4m (2018: GBP21.6m) with a margin of 20% (2018: 25%). The weaker market outlook has resulted in an impairment of GBP44.8m to the carrying values of goodwill in the INVE business.

Genetics

Good growth in revenue and Adjusted EBITDA driven by an increase in salmon egg volumes (+16%) and prices reflecting our continued innovation and launch of new traits. Revenues of GBP39.7m were up 11% (2018: GBP35.8m), ahead of growth in the sector. The Company's ongoing innovation together with its investment in quality, biosecurity and availability of supply through our new production facilities will support future growth. The dissolution of the joint venture with AquaChile is now complete including transfer of ownership of the Ensenada salmon egg hatchery which will form the platform to establish Chilean production. The valuation of biological assets increased by GBP8.3m (2018: GBP4.0m) driven by the growth in sales in the year, the strong order book at the year end and the increasing output potential of the new production sites. As the division's new shrimp genetics get closer to market launch the costs of development were capitalised for the first time, with GBP1.5m capitalised in the year. These factors supported growth in gross margins to 64% (2018: 58%). Operating costs increased in line with the increase in production capacity in salmon and shrimp. As a result, the division delivered strong Adjusted EBITDA growth to GBP10.1m (2018: GBP7.9m) with Adjusted EBITDA margin rising to 25% (2018: 22%).

Animal Health

Revenue of GBP17.7m up 10% (2018: GBP16.2m). Growth was driven by an increase in sales of Salmosan, the Company's current sea lice treatment. This reflects the challenge of high sea lice levels, particularly in Chile. The Company continued to generate a contribution from commercial scale field trials of its next generation sea lice treatment (BMK08), although at a lower level than the prior year, as we approach commercial launch and the programme of trials in our main market reaches conclusion. Revenues from veterinary and diagnostics services also grew during the year.

Total R&D investment in the division was GBP11.2m (2018: GBP12.2m), of which GBP5.7m was expensed (2018: GBP5.6m). During the year the Company began a programme to reduce overall R&D spend while continuing to progress the main pipeline opportunities. This involved a streamlining of external R&D spend and a review of in-house trials facilities. The impact from this effort will come through from 2020 onwards.

Adjusted EBITDA loss narrowed for the division to GBP10.2m (2018: loss of GBP11.0m).

Knowledge Services

All operations of the division are included within discontinued operations. Revenue in this division in 2019 was GBP15.9m (2018: GBP15.8m) with associated Adjusted EBITDA of GBP1.3m (2018: GBP0.2m). Revenue was flat with a particularly strong performance in veterinary training offset by reduced sales in other businesses. Despite being broadly complementary to Benchmark's core activities, the Knowledge Services division is not integral to the Group's long-term strategy. Therefore, the disposal of the component businesses is part of the programme of structural efficiencies. The Company is in discussions with a number of interested parties and further announcements will be made in due course.

Exceptional items

Items that are material because of their nature whose significance is sufficient to warrant separate disclosure and identification within the consolidated financial statements are referred to as exceptional items. The separate reporting of exceptional items helps to provide an understanding of the Group's underlying performance. Exceptional expenses related to continuing operations of GBP0.6m (2018: GBP1.2m) derive from the changes in Group management. Exceptional expenses relating to discontinued operations of GBP0.7m (2018: GBPnil) include costs of closure of operations in the Knowledge Services division.

Depreciation, amortisation and impairments

Depreciation and impairments related to continuing operations of GBP8.5m (2018: GBP4.9m) with the increase principally arising from new production facilities coming onstream.

Amortisation and impairments related to continuing operations of GBP64.3m (2018: GBP16.8m) with the increase being due to impairments in the carrying value of goodwill related to the INVE business driven by the change in market outlook.

Net finance costs

During the year the Company completed a new senior secured floating rate bond issue of NOK 850m (USD 95.0m equivalent). The bond which matures in June 2023, will be listed on the Oslo market and has a coupon equivalent to the three months Norwegian Interbank Offered Rate + 5.25% p.a. with quarterly interest payments. This new bond issue was applied to refinance Benchmark's previous USD 90m revolving credit facility. In addition, a USD 15.0m revolving credit facility was provided by DNB Bank ASA (50%) and HSBC UK Bank PLC (50%). The revolving credit facility incurs interest in the range of 3.0 to 3.5% over London Interbank Offered Rate. The Group's other ring-fenced facilities remained in place including facilities totalling NOK 291m related to the funding of the new salmon egg production facility in Norway. Interest on these other debt facilities ranges between 2.65% above Norwegian base rates and 5%.

The Group incurred net finance costs from continuing operations of GBP12.1m during the year (2018: GBP4.6m). Included within this was interest charged on the Group's interest-bearing debt facilities of GBP6.0m (2018: GBP2.4m) reflecting a higher level of net debt during the year and the higher coupon post refinancing. Further, a foreign exchange loss of GBP4.6m arose due to the movement in exchange rates and there was a charge of GBP1.7m (2018: GBPnil) relating to the fair value change in the cross currency hedge taken out during the year.

Statutory loss before tax

The loss before tax from continuing operations for the year at GBP73.3m is higher than the prior year (2018: loss of GBP8.4m) due to the impact of the reduced trading result; higher depreciation, amortisation, and in particular impairment charges; and the increase in finance costs and exceptional costs; all as outlined above.

Taxation

There was a tax credit related to continuing operations in the period of GBP13,000 (2018: credit of GBP8.9m), mainly due to overseas tax charges in the Genetics division of GBP1.5m and in the Advanced Nutrition division of GBP2.6m, offset by deferred tax credits on intangible assets mainly arising on consolidation from acquisitions (the 2018 credit principally related to a reduction in the corporation tax rate in Belgium from 34% to 25%), recognition of a deferred tax asset on losses expected to be recovered.

Loss for the year

The loss for the year from continuing operations was GBP73.3m (2018: profit of GBP0.5m) and from discontinued operations the loss was GBP9.8m (2018: loss of GBP4.9m).

Earnings per share

Basic loss and diluted loss per share were both -15.03p (2018: loss per share -0.94p). The movement year on year is due to the reduced result for the year as noted above.

Dividends

No dividends have been paid or proposed in the year (2018: GBPnil) and the Board is not recommending a final dividend in respect of the year ended 30 September 2019.

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 2019, the carrying value of biological assets was GBP28.5m (2018: GBP20.4m). The movement in the overall carrying value of biological assets is due principally to the increase in sales of and future orders for the Company's salmon eggs as well as expansion of own production.

Intangibles

Capitalised R&D increased by GBP0.5m to GBP7.7m (2018: GBP7.2m). R&D costs related to products that are close to commercial launch have to be capitalised when they meet the requirements set out under IFRS. Increased activities related to trials of and progress with the marketing authorisation application for BMK08 pushed capitalised development costs higher, together with the first time capitalisation of the new shrimp genetics. As Benchmark goes through a period of an increasing number of new products approaching launch this capitalisation will be an ongoing feature in the mid-term.

The dissolution of the genetics joint venture in Chile, and the consequent transfer of assets to Benchmark to part satisfy return of the original investment, led to an intangible addition representing the IP inherent within the breeding programme in Chile.

The impairment of intangible assets during the year of GBP47.6m principally relates to impairment of the goodwill from the acquisition of INVE where the change in market outlook has led to a reduction in value of the discounted cash flows for the Advanced Nutrition division.

Capital expenditure

Tangible fixed asset additions of GBP12.5m (2018: GBP25.1m) includes GBP1.0m cash investment in the final phase of the construction of the new salmon egg production facility in Norway, GBP4.1m initial investment in the new salmon egg production facility in Chile (transferred on dissolution of the previous JV) and GBP2.2m on improvements to salmon slaughter facilities in Iceland that are a vital part of the egg production process.

Cash flow

Net cash flow from operations was an outflow of GBP9.2m (2018: outflow of GBP3.7m) principally due to working capital increases: in Advanced Nutrition from purchase commitments with key live feed suppliers and in general the phasing of sales towards year end in general. In addition, the build of biological assets at new genetics production facilities resulted in an increased outflow in working capital of GBP8.6m (2018: outflow of GBP4.1m).

Total outflows to capex of GBP15.8m (2018: GBP32.7m) were substantially reduced because investment in the new salmon egg facility concluded at the beginning of the year.

Other cashflow items included the payment of the deferred consideration of GBP7.0m for the investment in the joint venture with AquaChile which was completed in 2018 and the initial consideration received on the subsequent dissolution of that joint venture in 2019 of GBP5.9m. The balance of the consideration for the dissolution of the joint venture of GBP6.9m was received post year end.

As a result of the above free cash flow was an outflow of GBP23.9m (2018: outflow of GBP36.2m). Net proceeds from increased borrowings of GBP21.4m were used to fund this outflow.

Cash at the period end stood at GBP16.1m (2018: GBP24.1m).

Liquidity and net debt

The Group's finance function is responsible for sourcing and structuring borrowing requirements.

As detailed under net finance costs above, during the year the Company completed a refinancing including a new senior secured floating rate bond issue of NOK 850m (USD 95.0m equivalent) and a USD 15.0m revolving credit facility. The Group's other ring-fenced facilities remained in place including facilities totalling NOK 291m related to the funding of the new salmon egg production facility in Norway.

The Group had GBP103.2m in bank borrowings at the end of the year (2018: GBP79.7m). Reported debt includes GBP27.1m in relation to the funding of the Group's new salmon egg production facility in Norway. This is ring-fenced debt within SalmoBreed Salten without recourse to the rest of the Group. At the year end a maximum of GBP12.2m was available on the Group's super senior revolving credit facility, of this GBPnil had been drawn. Net debt increased to GBP87.1m during the year (2018: GBP55.7m) as investment in working capital expanded and available long-term capital was invested in R&D and production capacity.

As outlined in the Basis of Preparation in Note 1 to the financial statements, there is an information undertaking within the terms of the NOK bond that requires the Company to publish quarterly financial statements within 60 days of the quarter end. The Company did not satisfy this requirement for the quarter to 30 September 2019 because the year end audit was not sufficiently complete for the publication of what would have effectively been deemed a Preliminary Announcement by reference to the UK Listing Rules. The NOK bond terms include permission for the Company to publish the quarterly financials within 20 business days of the end of the initial 60 day period.The Company satisfied the requirements of the NOK bond terms by announcing its quarterly financials simultaneously with the announcement of its preliminary results for the year ended 30 September 2019 on 20 December 2019.

The facilities combined with the year end cash balance of GBP16.1m means the Group had total liquidity of GBP28.2m. This, in conjunction with the expected proceeds from the disposal of non-core businesses and the reduction in cash outflows resulting from closing certain non-core activities is expected by the Directors to provide the Group with sufficient liquidity to fund continuing growth and provide adequate headroom.

Going concern

The accounts for 2019 have been prepared on a going concern basis. The forecast projections of the Group's performance for the period to September 2021 have been reviewed by the Directors and the Board has concluded that, while there is a material uncertainty that may cast significant doubt upon the ability to continue as a going concern, subject to the successful disposal of the discontinued operations in the near-term or, in the absence of this, to appropriate actions being taken to significantly reduce investment in and costs related to the product pipeline or further funding being sought, the Group should be able to continue in operation and meet its liabilities as they fall due over the period considered.

Unaudited Quarterly Financial Statements

Consolidated Income Statement

 
                                                                                                      YTD 2018 
                                                           Q4 2019         Q4 2018      YTD 2019     Restated* 
 All figures in GBP000's                    Notes      (unaudited)     (unaudited)     (audited)     (audited) 
-----------------------------------------  -------  --------------  --------------  ------------  ------------ 
 Revenue                                                    36,978          33,618       127,343       131,643 
 Cost of sales                                            (15,344)        (14,085)      (61,348)      (63,150) 
-------------------------------------------------- 
 Gross profit                                               21,634          19,533        65,995        68,493 
 Research and development costs                            (3,602)         (3,505)      (12,830)      (12,040) 
 Other operating costs                                    (10,577)         (8,845)      (40,700)      (37,012) 
 Share of loss of equity-accounted 
  investees, net of tax                                         18           (189)         (414)         (362) 
--------------------------------------------------  --------------  --------------  ------------  ------------ 
 Adjusted EBITDA(2)                                          7,473           6,994        12,051        19,079 
 Exceptional - restructuring/acquisition 
  related items                                              (530)           (333)         (581)       (1,239) 
--------------------------------------------------  --------------  --------------  ------------  ------------ 
 EBITDA(1)                                                   6,943           6,661        11,470        17,840 
 Depreciation and impairment                               (3,726)         (1,533)       (8,466)       (4,869) 
 Amortisation and impairment                              (51,486)         (4,252)      (64,254)      (16,802) 
--------------------------------------------------  --------------  --------------  ------------  ------------ 
 Operating (loss) / profit                                (48,269)             876      (61,250)       (3,831) 
 Finance cost                                              (5,489)         (2,098)      (12,422)       (4,927) 
 Finance income                                                 81             214           368           332 
--------------------------------------------------  --------------  --------------  ------------  ------------ 
 Loss before taxation                                     (53,677)         (1,008)      (73,304)       (8,426) 
 Tax on loss                                                   456           (131)            13         8,906 
--------------------------------------------------  --------------                  ------------ 
 (Loss)/profit from continuing 
  operations                                              (53,221)         (1,139)      (73,291)           480 
--------------------------------------------------  --------------  --------------  ------------  ------------ 
 Discontinued operations 
 Loss from discontinued operations, 
  net of tax                                               (8,278)         (1,156)       (9,789)       (4,869) 
--------------------------------------------------  --------------  --------------  ------------  ------------ 
                                                          (61,499)         (2,295)      (83,080)       (4,389) 
 -------------------------------------------------  --------------  --------------  ------------  ------------ 
 Loss for the year attributable 
  to: 
 - Owners of the parent                                   (61,809)         (2,837)      (83,857)       (5,009) 
 - Non-controlling interest                                    310             542           777           620 
--------------------------------------------------                  -------------- 
                                                          (61,499)         (2,295)      (83,080)       (4,389) 
 -------------------------------------------------  --------------  --------------  ------------  ------------ 
 
 Earnings per share 
 Basic loss per share (pence)                              (11.07)          (0.51)       (15.03)        (0.94) 
 Diluted loss per share (pence)                            (11.07)          (0.51)       (15.03)        (0.94) 
 Earnings per share - continuing 
  operations 
 Basic loss per share (pence)                               (9.59)          (0.30)       (13.28)        (0.03) 
 Diluted loss per share (pence)                             (9.59)          (0.30)       (13.28)        (0.03) 
 
 
 Adjusted EBITDA from continuing 
  operations                                                 7,473           6,994        12,051        19,079 
 Adjusted EBITDA from discontinued 
  operations                                                  (99)           (911)         1,674       (2,061) 
--------------------------------------------------  --------------  --------------  ------------  ------------ 
 Total Adjusted EBITDA                                       7,374           6,083        13,725        17,018 
--------------------------------------------------  --------------  --------------  ------------  ------------ 
 

1 EBITDA - Earnings before interest, tax, depreciation and amortisation

2 Adjusted EBITDA - EBITDA before exceptional and acquisition related items

* 2018 numbers have been restated to reflect the ongoing continuing business. Knowledge Services Division and the veterinary services business within the Animal Health Division have been moved to discontinued operations in line with IFRS 5.

Consolidated Statement of Comprehensive Income

 
                                                        Q4 2019         Q4 2018      YTD 2019      YTD 2018 
 All figures in GBP000's                            (unaudited)     (unaudited)     (audited)     (audited) 
------------------------------------------  ---  --------------  --------------  ------------  ------------ 
 
 Loss for the period                                   (61,499)         (2,295)      (83,080)       (4,389) 
 Other comprehensive income 
 Items that are or may be reclassified 
  subsequently to profit or loss 
 Foreign exchange translation differences                 9,424           2,505        13,919         7,624 
 Cash flow hedges - changes in fair 
  value                                                 (2,615)               -       (3,549)             - 
 Cash flow hedges - reclassified to 
  profit or loss                                           (10)               -          (17)             - 
 Total comprehensive income for the 
  period                                               (54,700)             210      (72,727)         3,235 
-----------------------------------------------  --------------  --------------  ------------  ------------ 
 
 Total comprehensive income for the period attributable to: 
 - Owners of the parent                                (54,924)           (313)      (73,174)         2,546 
 - Non-controlling interest                                 224             523           447           689 
-----------------------------------------------                                  ------------  ------------ 
                                                       (54,700)             210      (72,727)         3,235 
 ----------------------------------------------  --------------  --------------  ------------  ------------ 
                                                              . 
 Total comprehensive income for the period attributable to owners 
  of the parent: 
 - Continuing operations                               (47,186)             534      (63,188)         7,048 
 - Discontinued operations                              (7,738)           (847)       (9,986)       (4,502) 
----------------------------------------------- 
                                                       (54,924)           (313)      (73,174)         2,546 
 ----------------------------------------------  --------------  --------------  ------------  ------------ 
 

Consolidated Balance Sheet

as at 30 September 2019

 
 
                                               30 September    30 September 
                                                       2019            2018 
 All figures in GBP000's                          (audited)       (audited) 
------------------------------------------   --------------  -------------- 
 Assets 
 Property, plant and equipment                       88,900          99,527 
 Intangible assets                                  275,744         325,386 
 Equity-accounted investees                           3,453          17,457 
 Other investments                                       25              29 
 Biological and agricultural assets                  12,469           8,502 
 Trade and other receivables                              -           4,145 
 Non-current assets                                 380,591         455,046 
-------------------------------------------  --------------  -------------- 
 Inventories                                         22,609          20,483 
 Biological and agricultural assets                  16,024          11,892 
 Trade and other receivables                         52,136          41,337 
 Cash and cash equivalents                           16,051          24,090 
-------------------------------------------  --------------  -------------- 
                                                    106,820          97,802 
 Assets held for sale                                15,970               - 
 Current assets                                     122,790          97,802 
-------------------------------------------  --------------  -------------- 
 Total assets                                       503,381         552,848 
-------------------------------------------  --------------  -------------- 
 Liabilities 
 Trade and other payables                          (35,235)        (45,680) 
 Loans and borrowings                               (3,231)           (898) 
 Corporation tax liability                          (2,703)         (2,629) 
 Provisions                                           (404)            (70) 
-------------------------------------------  --------------  -------------- 
                                                   (41,573)        (49,277) 
 Liabilities directly associated with              (10,634)               - 
  the assets held for sale 
 Current liabilities                               (52,207)        (49,277) 
-------------------------------------------  --------------  -------------- 
 Loans and borrowings                              (99,961)        (78,868) 
 Other payables                                     (2,004)         (1,219) 
 Deferred tax                                      (38,743)        (41,637) 
 Non-current liabilities                          (140,708)       (121,724) 
-------------------------------------------  --------------  -------------- 
 Total liabilities                                (192,915)       (171,001) 
-------------------------------------------  --------------  -------------- 
 Net assets                                         310,466         381,847 
-------------------------------------------  --------------  -------------- 
 Issued capital and reserves attributable 
  to owners of the parent 
 Share capital                                          559             557 
 Additional paid-in capital                         358,044         357,894 
 Capital redemption reserve                               5               5 
 Retained earnings                                (110,916)        (28,240) 
 Hedging reserve                                    (3,566)               - 
 Foreign exchange reserve                            60,202          45,953 
 Equity attributable to owners of the 
  parent                                            304,328         376,169 
 Non-controlling interest                             6,138           5,678 
------------------------------------------- 
 Total equity and reserves                          310,466         381,847 
-------------------------------------------  --------------  -------------- 
 

Consolidated Statement of Changes in Equity

for the year ended 30 September 2019

 
                                                                                       Total 
                                                                                attributable 
                                                                                   to equity 
                                  Share                                              holders           Non- 
 All figures in       Share     premium       Other     Hedging     Retained              of    controlling      Total 
 GBP000's           capital     reserve    reserves     reserve     earnings          parent       interest     equity 
---------------  ----------  ----------  ----------  ----------  -----------  --------------  -------------  --------- 
 As at 30 
  September 
  2017 
  (audited)             522     339,431      38,403           -     (24,742)         353,614          4,971    358,585 
---------------  ----------  ----------  ----------  ----------  -----------  --------------  -------------  --------- 
 Comprehensive 
 income 
 for the year 
 (Loss)/profit 
  for the 
  year                    -           -           -           -      (5,009)         (5,009)            620    (4,389) 
 Other 
  comprehensive 
  income                  -           -       7,555           -            -           7,555             69      7,624 
 Total 
  comprehensive 
  income for 
  the year                -           -       7,555           -      (5,009)           2,546            689      3,235 
---------------  ----------  ----------  ----------  ----------  -----------  --------------  -------------  --------- 
 Contributions 
 by and 
 distributions 
 to owners 
 Share issue             35      18,463           -           -            -          18,498              -     18,498 
 Share based 
  payment                 -           -           -           -        1,511           1,511              -      1,511 
 Total 
  contributions 
  by and 
  distributions 
  to owners              35      18,463           -           -        1,511          20,009              -     20,009 
---------------  ----------  ----------  ----------  ----------  -----------  --------------  -------------  --------- 
 Changes in 
 ownership 
 Acquisition of 
  NCI 
  without a 
  change in 
  control                 -           -           -           -            -               -             18         18 
 Total changes 
  in ownership 
  interests               -           -           -           -            -               -             18         18 
 Total 
  transactions 
  with owners 
  of the 
  Company                35      18,463           -           -        1,511          20,009             18     20,027 
---------------  ----------  ----------  ----------  ----------  -----------  --------------  -------------  --------- 
 As at 30 
  September 
  2018 
  (audited)             557     357,894      45,958           -     (28,240)         376,169          5,678    381,847 
---------------  ----------  ----------  ----------  ----------  -----------  --------------  -------------  --------- 
 
 Comprehensive 
 income 
 for the period 
 (Loss)/profit 
  for the 
  period                  -           -           -           -     (83,857)        (83,857)            777   (83,080) 
 Other 
  comprehensive 
  income                  -           -      14,249     (3,566)            -          10,683          (330)     10,353 
 Total 
  comprehensive 
  income for 
  the period              -           -      14,249     (3,566)     (83,857)        (73,174)            447   (72,727) 
---------------  ----------  ----------  ----------  ----------  -----------  --------------  -------------  --------- 
 Contributions 
 by and 
 distributions 
 to owners 
 Share issue              2         150           -           -            -             152              -        152 
 Share based 
  payment                 -           -           -           -        1,181           1,181              -      1,181 
 Total 
  contributions 
  by and 
  distributions 
  to owners               2         150           -           -        1,181           1,333              -      1,333 
---------------  ----------  ----------  ----------  ----------  -----------  --------------  -------------  --------- 
 Changes in 
 ownership 
 Disposal of 
  subsidiary 
  with NCI                -           -           -           -            -               -             13         13 
 Total changes 
  in ownership 
  interests               -           -           -           -            -               -             13         13 
 Total 
  transactions 
  with owners 
  of the 
  Company                 2         150           -           -        1,181           1,333             13      1,346 
---------------  ----------  ----------  ----------  ----------  -----------  --------------  -------------  --------- 
 As at 30 
  September 
  2019 
  (audited)             559     358,044      60,207     (3,566)    (110,916)         304,328          6,138    310,466 
---------------  ----------  ----------  ----------  ----------  -----------  --------------  -------------  --------- 
 

Consolidated Statement of Cash Flows

 
 All figures in GBP000's                              YTD 2019      YTD 2018 
                                                     (audited)     (audited) 
-------------------------------------------  ---  ------------  ------------ 
 Cash flows from operating activities 
 Loss for the period                                  (83,080)       (4,389) 
 Adjustments for: 
 Depreciation and impairment of property, 
  plant and equipment                                   17,227         6,841 
 Amortisation and impairment of intangible 
  fixed assets                                          66,087        18,002 
 Loss on sale of property, plant and 
  equipment                                              (838)             8 
 Finance income                                          (368)         (332) 
 Finance costs                                           7,773         2,432 
 Other adjustments for non-cash items                       68       (1,931) 
 Share of profit of equity-accounted 
  investees, net of tax                                    414           362 
 Foreign exchange losses                                 5,620         2,609 
 Share based payment expense                             1,181         1,511 
 Tax credit                                                111       (9,270) 
------------------------------------------------  ------------  ------------ 
                                                        14,195        15,843 
 Increase in trade and other receivables              (12,516)       (4,355) 
 Increase in inventories                               (2,273)         (815) 
 Increase in biological and agricultural 
  assets                                               (8,593)       (4,102) 
 Increase/(decrease) in trade and 
  other payables                                         3,968       (4,026) 
 Increase/(decrease) in provisions                         261         (388) 
------------------------------------------------  ------------  ------------ 
                                                       (4,958)         2,157 
 Income taxes paid                                     (4,253)       (5,898) 
------------------------------------------------  ------------  ------------ 
 Net cash flows used in operating 
  activities                                           (9,211)       (3,741) 
------------------------------------------------  ------------  ------------ 
 Investing activities 
 Acquisition of subsidiaries, net 
  of cash acquired                                         (7)             - 
 Purchase of investments                               (7,020)       (6,356) 
 Receipts from disposal of investments                   5,942             - 
 Purchases of property, plant and 
  equipment                                            (7,850)      (25,072) 
 Purchase of intangibles                               (7,964)       (7,581) 
 Proceeds from sale of fixed assets                      1,131           233 
 Interest received                                         447           261 
------------------------------------------------  ------------  ------------ 
 Net cash flows used in investing 
  activities                                          (15,321)      (38,515) 
------------------------------------------------  ------------  ------------ 
 Financing activities 
 Proceeds of share issues                                    2        18,498 
 Proceeds from bank or other borrowings                 92,578        41,206 
 Acquisition of NCI                                          -          (33) 
 Repayment of bank or other borrowings                (71,224)       (5,815) 
 Cash advances and loans made to other 
  parties                                                    -       (4,076) 
 Interest and finance charges paid                     (5,366)       (2,442) 
 Payments to finance lease creditors                       (5)         (218) 
 Net cash inflow from financing activities              15,985        47,120 
------------------------------------------------  ------------  ------------ 
 Net (decrease)/increase in cash and 
  cash equivalents                                     (8,547)         4,864 
 Cash and cash equivalents at beginning 
  of period                                             24,090        18,779 
 Effect of movements in exchange rate                      508           447 
------------------------------------------------  ------------  ------------ 
 Cash and cash equivalents at end 
  of period                                             16,051        24,090 
------------------------------------------------  ------------  ------------ 
 

Notes

   1.   Basis of preparation 

These unaudited quarterly 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 2019.

The consolidated financial statements of the Group for the year ended 30 September 2019 were prepared in accordance with International Financial Reporting Standards ("IFRSs") as adopted for use in the EU ("adopted IFRSs") and applicable law.

Whilst the financial information included in this preliminary interim statement has been prepared on the basis of the requirements of IFRSs in issue, as adopted by the European Union and effective at 30 September 2019, 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 2019 or 2018. Statutory accounts for 2018 have been delivered to the registrar of companies, and those for 2019 will be delivered in due course. The auditor has reported on those accounts. Their report for 2019 was (i) unqualified, (ii) contains a material uncertainty in respect of going concern to which the auditor drew attention by way of emphasis without modifying their report and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006. Their report for the accounts of 2018 was (i) unqualified, (ii) did not include a reference of any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

The financial statements are prepared on the going concern basis.

As at 30 September 2019 the Group had net assets of GBP310.5m (2018: GBP381.8m), including cash of GBP16.1m (2018: GBP24.1m) as set out in the consolidated balance sheet. The Group made a loss for the year of GBP83.1m (2018: GBP4.4m). As at 30 September 2019 the Company had net assets of GBP304.2m (2018: GBP341.5m), including cash of GBP0.8m (2018: GBP2.3m. The Company made a loss for the year of GBP35.2m (2018: GBP8.6m).

The Group was refinanced during the year, and on 24 June 2019 a new four-year senior secured floating rate listed bond issue of NOK 850m was completed and a new three and a half year USD 15m revolving credit facility agreed. As at 20 December total borrowings from the Group's facilities were GBP102.3m and the most recent month end cash reserves at the end of November were GBP19.8m.

The Directors have prepared base and sensitised cash flow forecasts for the Group covering the period to September 2021, including forecast compliance with the covenants specified in the new borrowings. Significant elements of the Group continue to be in a growth and investment phase, including the final stages of obtaining Marketing Authority approval for its latest sea lice treatment and the growth and expansion of its genetics business into inland salmon egg production and disease resistant shrimp genetics while riding out the headwinds in the shrimp market. The Directors have taken the decision to divest from a number of smaller or non-core businesses in the Group to help fund this ongoing investment and a structural efficiencies programme is well underway to that end. The business forecasts therefore include key assumptions on the timing and value of these business disposals and asset realisations, as well as other trading uncertainties common in businesses engaged in the aquaculture and research and development industries. The trading uncertainties include the timing of the grant of full licences for the new sea lice treatment, the pace of recovery in global shrimp markets, achieving anticipated growth targets in core Advanced Nutrition and Genetics markets, the supply and pricing of key raw materials, and potential distribution partner agreements. However good progress has been made with all of the disposals subject to the non-core divestment programme, with several reaching the non-binding offer stage and offers received reflecting a high level of interest.

The Directors have considered reasonably possible downside sensitivity scenarios, including mitigating actions within their control, should these occur around deferring and reducing non-essential capital and revenue expenditure and working capital management. These forecast cash flows, considering the ability and intention of the directors to implement mitigating actions should they be required, provide sufficient headroom in the forecast period. However, should the reasonably possible downside sensitivities from trading occur, alongside a significant delay or a reduction in the expected disposal proceeds below the low end of the valuation range in some of the larger business disposals, then this could remove all available headroom. In this event, either further financing would have to be sought or additional structural efficiency initiatives be identified and pursued. In the eventuality that further financing is required, the Directors believe that relationships with funders and the expected returns available on the growth areas within the Group in which ongoing investment is being made are sufficiently strong and attractive for the Group to be able to secure adequate additional funding should it be required.

Based on their assessment, the Directors believe it remains appropriate to prepare the financial statements on a going concern basis. However, these circumstances represent a material uncertainty that may cast significant doubt on the Group's and Company's ability to continue as a going concern and therefore to continue realising their assets and discharging its liabilities in the normal course of business. The financial statements do not include any adjustments that would result from the basis of preparation being inappropriate.

This information has been approved for issue by the Board of Directors of Benchmark Holdings plc, a company domiciled and incorporated in the United Kingdom.

   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 as follows:

-- Animal Health Division - provides veterinary services, environmental services diagnostics and animal health products to global aquaculture, and manufactures licenced veterinary vaccines and vaccine components;

-- Benchmark Genetics Division - 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 Animal Nutrition Division - manufactures and provides technically advanced nutrition and health products to the global aquaculture industry.

In addition to the above, reported as "all other segments" is the Knowledge Services division. The division provides sustainable food production consultancy, technical consultancy and assurance services and promotes sustainable food production and ethics through online news and technical publications for the international agriculture and food processing sectors and through delivery of training courses to the industries.

In order to reconcile the segmental analysis to the Consolidated Income Statement, Corporate and Inter-segment sales are also shown. Corporate represents revenues earned from recharging certain central costs to the operating divisions, 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.

 
  Segmental Revenue 
                                      Q4 2019          Q4 2018       YTD 2019       YTD 2018 
   All figures in GBP000's        (unaudited)      (unaudited)      (audited)      (audited) 
----------------------------  ---------------  ---------------  -------------  ------------- 
  Animal Health                         6,618            7,634         17,742         16,153 
  Genetics                              9,978            6,234         39,696         35,755 
  Advanced Animal Nutrition            22,288           21,495         76,776         85,746 
  All other segments                    3,262            3,527         15,881         15,786 
  Corporate                             1,505            1,489          6,534          5,277 
  Inter-segment sales                 (1,822)          (2,008)        (7,890)        (7,250) 
  Total                                41,829           38,371        148,739        151,467 
----------------------------  ---------------  ---------------  -------------  ------------- 
 
 
  Segmental Adjusted EBITDA 
                                      Q4 2019          Q4 2018       YTD 2019       YTD 2018 
   All figures in GBP000's        (unaudited)      (unaudited)      (audited)      (audited) 
----------------------------  ---------------  ---------------  -------------  ------------- 
  Animal Health                         (848)            (375)       (10,197)       (10,992) 
  Genetics                              4,335            3,317         10,075          7,871 
  Advanced Animal Nutrition             4,479            3,795         15,406         21,627 
  All other segments                      301            (250)          1,264            203 
  Corporate                             (893)            (404)        (2,823)        (1,795) 
  Inter-company                             -                -              -            104 
  Total                                 7,374            6,083         13,725         17,018 
----------------------------  ---------------  ---------------  -------------  ------------- 
 

Reconciliations of segmental information to IFRS measures

 
 Revenue 
                                           Q4 2019          Q4 2018       YTD 2019       YTD 2018 
   All figures in GBP000's             (unaudited)      (unaudited)      (audited)      (audited) 
---------------------------------  ---------------  ---------------  -------------  ------------- 
 
 Total revenue per segmental 
  information                               41,829           38,371        148,739        151,467 
 Less: revenue from discontinued 
  operations                               (4,851)          (4,753)       (21,396)       (19,824) 
--------------------------------- 
 Consolidated revenue                       36,978           33,618        127,343        131,643 
---------------------------------  ---------------  ---------------  -------------  ------------- 
 
 
  Reconciliation of Reportable Segments Adjusted EBITDA to Loss 
   before taxation from continuing operations 
                                                                                        YTD 
                                                    Q4 2019          Q4 2018           2019       YTD 2018 
   All figures in GBP000's                      (unaudited)      (unaudited)      (audited)      (audited) 
------------------------------------------  ---------------  ---------------  -------------  ------------- 
  Total reportable segment Adjusted 
   EBITDA                                             7,966            6,737         15,284         18,506 
  Other Segment and Corporate 
   Adjusted EBITDA                                    (592)            (654)        (1,559)        (1,488) 
------------------------------------------  ---------------  ---------------  -------------  ------------- 
                                                      7,374            6,083         13,725         17,018 
  Less: Adjusted EBITDA from discontinued 
   operations                                            99              911        (1,674)          2,061 
------------------------------------------  ---------------  ---------------  -------------  ------------- 
  Adjusted EBITDA from continuing 
   operations                                         7,473            6,994         12,051         19,079 
  Exceptional including acquisition 
   related items                                      (530)            (333)          (581)        (1,239) 
  Depreciation and impairment                       (3,726)          (1,533)        (8,466)        (4,869) 
  Amortisation and impairment                      (51,486)          (4,252)       (64,254)       (16,802) 
  Net finance costs                                 (5,408)          (1,884)       (12,054)        (4,595) 
  Loss before taxation from continuing 
   operations                                      (53,677)          (1,008)       (73,304)        (8,426) 
------------------------------------------  ---------------  ---------------  -------------  ------------- 
 
   3    Impairment of goodwill and other intangible assets 

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 Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired.

Goodwill arises across all of the Group's operating segments, and is allocated specifically against the following CGUs:

 
                                Animal                       Advanced   Knowledge 
                                Health   Genetics    Animal Nutrition    Services     Total 
                                  2019       2019                2019        2019      2019 
                                GBP000     GBP000              GBP000      GBP000    GBP000 
----------------------------  --------  ---------  ------------------  ----------  -------- 
 Benchmark Vaccines Limited        432          -                   -           -       432 
 Salmobreed AS                       -      7,065                   -           -     7,065 
 Stofnfiskur HF                      -     13,146                   -           -    13,146 
 Akvaforsk Genetic Center*           -      8,691                   -           -     8,691 
 INVE Aquaculture Group              -          -              79,248           -    79,248 
                              --------  ---------  ------------------  ----------  -------- 
                                   432     28,902              79,248           -   108,582 
----------------------------  --------  ---------  ------------------  ----------  -------- 
 

*Includes goodwill arising from the joint acquisition of Akvaforsk Genetics Center AS (which was transferred into Benchmark Genetics Norway) in the year and Benchmark Genetics USA (formerly Akvaforsk Genetics Center Inc.)

 
                                   Animal                       Advanced   Knowledge     Total 
                                   Health   Genetics    Animal Nutrition    Services 
                                     2018       2018                2018        2018      2018 
                                   GBP000     GBP000              GBP000      GBP000    GBP000 
-------------------------------  --------  ---------  ------------------  ----------  -------- 
 FVG Limited                          288          -                   -           -       288 
 Benchmark Vaccines Limited           432          -                   -           -       432 
 Atlantic Veterinary Services 
  Limited                             167          -                   -           -       167 
 Salmobreed AS                          -      7,435                   -           -     7,435 
 Stofnfiskur HF                         -     13,874                   -           -    13,874 
 Akvaforsk Genetic Center*              -      9,194                   -           -     9,194 
 INVE Aquaculture Group                 -          -             117,117           -   117,117 
 FAI do Brasil Criacao Animal 
  Ltda                                  -          -                   -          96        96 
 FAI Aquaculture Limited                -          -                   -         450       450 
 5M Enterprises Limited                 -          -                   -         379       379 
 Improve International Limited          -          -                   -       2,995     2,995 
 Improve International GmbH             -          -                   -          12        12 
-------------------------------  --------  ---------  ------------------  ----------  -------- 
                                      887     30,503             117,117       3,932   152,439 
-------------------------------  --------  ---------  ------------------  ----------  -------- 
 

*Includes goodwill arising from the joint acquisition of Akvaforsk Genetics Center AS (which was transferred into Benchmark Genetics Norway) in the year and Benchmark Genetics USA (formerly Akvaforsk Genetics Center Inc.)

The recoverable amounts of the above CGUs, with the exception of the Knowledge Services, the operations of which are discontinued, 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 cashflows that these projections produced were discounted at pre-tax discount rates based on the Group's beta adjusted cost of capital reflecting management's assessment of specific risks related to each cash generating unit. Specific assumptions used are as follows.

Animal Health

The pre-tax cashflows from the five-year projections were discounted using a pre-tax discount rate of 13.1% (2018: 12.4%). An assumed CAGR of revenue of 49% (2018: 77%) in the five-year plan (2018: three-year plan) reflects the importance of the launch and commercialisation of the division's new sea lice treatment in the forecast period. A long-term growth rate of 2.5% (2018: 2.5%) has been used to extrapolate the terminal year cashflow into perpetuity.

The valuation of the Animal 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 goodwill. However, should the division's new sea lice treatment not be successfully launched and commercialised, then impairment of the goodwill and other intangible assets could be possible.

Genetics

The pre-tax cashflows from the five-year projections were discounted using a pre-tax discount rate of 12.1% (2018: 11.2%). CAGR of revenue of 15% (2018: 18%) is implied by the five-year plan (2018: three-year plan), and a long-term growth rate of 2.5% (2018: 2.5%) has been used to extrapolate the terminal year cashflow into perpetuity.

Sensitivity testing of the recoverable amount to reasonably possible changes in key assumptions has been performed. All other assumptions being unchanged, an increase in the pre-tax discount rate to 15.2% would reduce the headroom on the Genetics CGU to nil. Should the discount rate increase further than this, then an impairment of the goodwill would be likely.

Advanced Animal Nutrition

The continued aggressive shrimp market conditions being experienced during the year and the expectation of a slower longer-term recovery in that market led to a reduction in the recoverable value of the CGU. The pre-tax cashflows from the five-year projections were discounted using a pre-tax discount rate of 11.5% (2018: 11.2%). CAGR of revenue of 12% (2018: 9%) is implied by the five-year plan, with the rate reflecting a particularly low year in FY19 and the recovery back to previous year's levels as well as growth from new products. Long term growth rate of 3.5% (2018: 4.0%) has been used to extrapolate the terminal year cashflow into perpetuity.

Following this review, the value in use calculation for the CGU showed GBP242m and a resulting impairment charge of GBP44.8m was made to the carrying value of the goodwill. Management believes the longer-term market value to be higher than this but are unable to test this in the market given the current stage of the cycle of the shrimp market.

The value in use assessment is sensitive to changes in the key assumptions used. Sensitivity analysis was performed and a reasonably likely downside scenario reflecting a slower recovery of the shrimp market and a reduced growth rate in the five-year plan for new products. This reasonably likely downside scenario includes a 5% reduction in FY20 revenue and CAGR of revenue of 10%. This would likely cause further impairment of GBP13.2m.

Knowledge Services

Following the decision to pursue the Structural Efficiencies programme, the Knowledge Services CGU is discontinuing. The goodwill for 5M Enterprises Limited, Improve International Limited, Improve International GmbH have been transferred into Assets Held for Sale. The goodwill for FAI do Brasil Criacao Animal Ltda and FAI Aquaculture Limited no longer has any value and has been fully impaired.

   4    Discontinued activities 

In June 2019 the Group announced a programme of structural efficiencies which focused on the disposal and discontinuation of non-core activities. This programme primarily includes the businesses of Knowledge Services Division and the veterinary services business within Animal Health Division.

Consequently, these operations have been classified as discontinued and part of the disposal group is presented as held for sale. The disposal group includes assets and liabilities within the Knowledge Services and Animal Health segments. The comparative consolidated statement of profit or loss and OCI has been represented to show the discontinued operations separately from continuing operations.

The disposals, together with the cost reduction/cost containment plan and enhanced working capital management will allow the Company to reallocate resources to priority revenue generating strategic projects and to maintain adequate headroom. The timing and proceeds from these actions are fundamental to maintain sufficient liquidity to execute the Group's product development programme and to support its Continuing Operations.

Significant progress to sell the disposal group has been made and sales are expected to complete within the first half of the financial year 2020.

Impairment losses relating to the disposal group

Impairment losses of GBP7,533,000 for write downs of discontinued operations to the lower of carrying amount and its fair value less costs to sell have been included in the "Depreciation and impairment" and "Amortisation and impairment" headings within discontinued operations. The impairment losses have been applied to reduce the carrying amount of Intangible assets and property, plant and equipment.

Results from discontinued operations

 
                                                       Q4 2019         Q4 2018      YTD 2019      YTD 2018 
 All figures in GBP000's                           (unaudited)     (unaudited)     (audited)     (audited) 
-----------------------------------------  ---  --------------  --------------  ------------  ------------ 
 Revenue                                                 4,851           4,753        21,396        19,824 
 Cost of sales                                         (2,888)         (3,549)      (11,580)      (14,297) 
---------------------------------------------- 
 Gross profit                                            1,963           1,204         9,816         5,527 
 Research and development costs                            (5)               -          (20)             - 
 Other operating costs                                 (2,057)         (2,115)       (8,122)       (7,588) 
----------------------------------------------  --------------  --------------  ------------  ------------ 
 Adjusted EBITDA                                          (99)           (911)         1,674       (2,061) 
 Exceptional - restructuring/acquisition 
  related items                                          (434)               -         (745)             - 
----------------------------------------------  --------------  --------------  ------------  ------------ 
 EBITDA                                                  (533)           (911)           929       (2,061) 
 Depreciation and impairment                           (6,560)           (455)       (8,761)       (1,972) 
 Amortisation and impairment                           (1,085)           (189)       (1,833)       (1,200) 
----------------------------------------------  --------------  --------------  ------------  ------------ 
 Operating loss / Loss before 
  taxation                                             (8,178)         (1,555)       (9,665)       (5,233) 
 Tax on loss                                             (100)             399         (124)           364 
----------------------------------------------  --------------  --------------  ------------  ------------ 
 Loss from discontinued operations                     (8,278)         (1,156)       (9,789)       (4,869) 
----------------------------------------------  --------------  --------------  ------------  ------------ 
 

Results from discontinued operations by segment

 
                              Animal     Knowledge                             Animal     Knowledge           Total 
                              Health      Services   Total Discontinued        Health      Services    Discontinued 
                            YTD 2019      YTD 2019             YTD 2019      YTD 2018      YTD 2018        YTD 2018 
 All figures in 
  GBP000's                 (audited)     (audited)            (audited)     (audited)     (audited)       (audited) 
-----------------  ---  ------------  ------------  -------------------  ------------  ------------  -------------- 
 Revenue                       6,255        15,141               21,396         5,467        14,357          19,824 
 Adjusted EBITDA                 288         1,386                1,674       (1,744)         (317)         (2,061) 
 Operating loss                (447)       (9,218)              (9,665)       (2,475)       (2,758)         (5,233) 
----------------------  ------------  ------------  -------------------  ------------  ------------  -------------- 
 
 
                               Animal       Knowledge            Total          Animal       Knowledge           Total 
                               Health        Services     Discontinued          Health        Services    Discontinued 
                              Q4 2019         Q4 2019          Q4 2019         Q4 2018         Q4 2018         Q4 2018 
 All figures in 
  GBP000's                (unaudited)     (unaudited)      (unaudited)     (unaudited)     (unaudited)     (unaudited) 
----------------  ---  --------------  --------------  ---------------  --------------  --------------  -------------- 
 Revenue                        1,736           3,115            4,851           1,576           3,177           4,753 
 Adjusted EBITDA                (287)             190             (97)           (497)           (414)           (911) 
 Operating loss                 (452)         (7,724)          (8,176)           (624)           (931)         (1,555) 
---------------------  --------------  --------------  ---------------  --------------  --------------  -------------- 
 

Enquiries

 
 For further information, please contact: 
 Benchmark Holdings plc                            Tel: 020 3696 0630 
 Peter George, Executive Chairman 
 Mark Plampin/Septima Maguire, CFO 
 Ivonne Cantu, Investor Relations 
 
 
 Numis (Broker and NOMAD)                          Tel: 020 7260 1000 
 James Black, Freddie Barnfield, Duncan Monteith 
 
 MHP Communications                                Tel: 020 3128 8742 
 

Katie Hunt, Reg Hoare, Alistair de Kare-Silver benchmark@mphc.com

About Benchmark

Benchmark's mission is to enable food 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

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

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