Benchmark Holdings Plc – Interim Results

BENCHMARK HOLDINGS PLC

Interim results for the six months ended 31 March 2019

Progress towards commercialisation of pipeline products and structural efficiencies

Benchmark (LSE:BMK), the aquaculture health, genetics and advanced nutrition business, announces its interim results for the six months ended 31 March 2019 (the “period”).

1 Adjusted EBITDA which reflects underlying profitability, is earnings before interest, tax, depreciation, amortisation, impairment, exceptional items and acquisition related expenditure as shown in the income statement.  

2 Adjusted Operating Profit is operating loss before exceptional items including acquisition related items and amortisation of intangible assets excluding development costs as shown in note 16 to the condensed consolidated financial statements

3 Adjusted profit before tax is earnings before tax, amortisation and impairment of acquired intangibles, exceptional items and acquisition related expenditure as shown in note 16 to the condensed consolidated financial statements 

4 Net debt is cash and cash equivalents less loans and borrowings as shown in note 16 to the condensed consolidated financial statements

5 Constant Currency change reflects the percentage change after retranslating 2019 figures using the same foreign exchange rates experienced in 2018.

H1 2019 Highlights:

Adjusted EBITDA growth driven by increased revenues and move towards higher value product mix

·    Revenue increased by 3% to £78.3m (H1 2018 £75.7m) despite challenging conditions in the global shrimp markets, with growth in Genetics, Health and Knowledge Services more than offsetting a drop in advanced nutrition

·    Adjusted EBITDA increased by 25% to £7.5m (H1 2018: £6.0m) reflecting the contribution of higher value products, an increase in the value of biological assets as a result of growing sales and increasing capacity in Norway, and cost control

·    Adjusted EBITDA margin increased to 9.6% (H1 2018: 8.0%)

·    Loss for the period reflects increased depreciation following recent investments and higher finance costs (H1 2018 profit benefitted from one-off deferred tax credit of £9.2m)

·    R&D investment of £8.5m (10.9% of sales) (H1 2018: £7.8m (10.3% of sales)), of which £2.9m was capitalised (H1 2018: £2.2m, 10.3%)⁶

·    Net debt was £65.5m including £26m ringfenced non-recourse debt to fund the Salten salmon egg facility in Norway

6 Capitalised R&D relates to trials and development work for products which have proven to be commercially viable and are close to launch, with the largest being the Group's next generation sea lice treatment.

Progress towards commercialisation of key products

·    The regulatory process is on track for the market launch of our next generation sea lice treatment. Commercial scale trials continue to show c. 99% efficacy amid growing customer interest

·    Trials in Asia of our disease resistant shrimp continued to show good results for survivability, yield and consistency, demonstrating their commercial potential. Production of broodstock for export commenced at the new facility in Florida

·    Production at new land based salmon egg facility in Salten, Norway ramped up to plan, and commercial opening took place post period end

Delivering on structural and operational efficiency initiatives

·    Streamlined Advanced Nutrition production facilities in Asia resulting in the sale of one site

·    Closure of one of the Company's lumpfish operations

·    Progress in developing alternatives for the commercialisation of companion animal products

Post period-end milestones 

·    Refinanced our USD$90m credit facilities and increased flexibility through the issuance of a four year term, NOK850m (c.USD$95m equivalent) bond listed in Oslo and a USD$15m revolving credit facility

·    Signed a joint venture in Thailand to commence construction of the first multiplication centre for the roll-out of our disease resistant shrimp in Asia

·    Entered into an agreement to dissolve the salmon genetics joint venture with AquaChile.  Decision to take control of a breeding facility owned by the JV to pursue an independent strategy in Chile

Commenting, Malcolm Pye, Chief Executive said:

“We have delivered growth in Adjusted EBITDA and made progress against our strategic priorities despite challenging conditions in the shrimp markets. We continue to implement operational and structural efficiency initiatives and we expect the Group to deliver broadly in line with market expectations for the full year.

“We are starting to see benefits from the investments we have made into a number of areas including our new facility in Salten, Norway. These investments, combined with the successful completion of our refinancing, leaves us well placed to deliver on our five year strategy to drive future growth and profitability.”