Oslo Business Memo



[annual report]* Steep revenue increase in Benchmark Holdings costs heavy operating loss in 2016.


The year ended 30 September 2016 was a transformative one for the Benchmark Group and saw us complete and consolidate our strategic platform; from genetics and egg production through to specialist nutrition and into the provision of veterinary services and health products for the global aquaculture sector. As a result, Benchmark is now uniquely resourced and positioned to provide an integrated package of products and services that have the potential to unlock some of the key biological constraints which hold back our customers' production potential.  The Group's technology platform of genetics, nutrition and health is supported by our technical knowledge, manufacturing and research capabilities. This combination enables us to have a significant market presence in the three key aquaculture species - salmon, tilapia and shrimp.

Our customers are increasingly recognising the significant value that Benchmark's technology platform can deliver in terms of driving their productivity, profitability and sustainability. 

The Group is focussing on delivering the many top line synergies arising from building this platform.  In particular, we are concentrating on growing sales and market share in developing markets and actively exploring routes to market and strategic relationships in these regions.  Furthermore, we are set to continue to execute our strategy of making value-enhancing bolt-on acquisitions, and investing in some important strategic joint ventures to deliver significant synergies and sales growth.

  • Results

During the year revenue grew substantially to £109.4m (2015: £44.2m). This was primarily as a result of the acquisition of INVE Aquaculture in December 2015 and the recovery of Salmosan sales and demonstrates that the business is beginning to scale.  Full details of the Group's earnings, cash flow and financial position are set out in the FY16 Financial Review.  The Group made an operating loss of £20.5m, principally due to increased investment in R&D, significant acquisition related expenses arising from the INVE acquisition and higher amortisation. These items offset an improved operating performance in the Animal Health division and the results of the profitable, newly formed Advanced Animal Nutrition division.  EBITDA before exceptional expenditure and acquisition related costs was £9.2m compared with a loss of £5.7m last year.

  • Summary of Activities

The acquisition of INVE Aquaculture, a leading specialist manufacturer of primary stage, technically advanced nutrition and health products for aquaculture, was the most transformative event of the year and, indeed, of the Company's history. This transaction has enabled Benchmark to offer a comprehensive range of products and services to our key markets and has significantly advanced our goal to bridge the sustainable food production gap. The acquisition has also opened up enhanced distribution opportunities for Benchmark's suite of products across its other divisions through INVE's existing network.

The INVE acquisition necessitated a substantial equity fundraise in conjunction with committed banking arrangements and facilities that will support the important capital expenditure projects and joint venture opportunities as we grow.  As a result, our balance sheet has been transformed and we have cash resources in situ to provide the flexibility we need to capture the opportunities we currently see.  As well as the INVE fundraise, we also raised a small amount of equity in the summer of 2016 which allowed a supportive, strategic investor to gain a meaningful interest in the business.  The £30m of capital raised at the time has allowed us to fully fund Salmobreed Salten which is critical to consolidating some of our long-term salmon farming relationships and also to buy a world-leading shrimp breeding programme from Ceniacua.  This acquisition was completed in August, andtogether with INVE, provides us with important opportunities in the rapidly-growing global shrimp market and penetration into the key geographies of Latin America and South East Asia.


Whilst this fundraise was done when the share price was relatively low, we believed that the small amount of the raise, coupled with the strategic benefits the new shareholder brings, justified the transaction.  I'm pleased that the share price has recovered since the middle of the year as the market has become more aware and familiar with the potential growth inherent in the Benchmark business strategy.  Our Capital Markets communications day in November  did much to bring the Benchmark business model to the attention of the investing institutions and we intend to repeat this exercise at regular intervals.

We have continued to invest in new and improved production facilities in order to secure supply of products key to our future growth.  The most significant examples are the new vaccine manufacturing facility in Braintree which has entered the commissioning phase, and the previously mentioned SalmoBreed Salten project where work has commenced to build a new salmon egg production unit in Norway which will increase our production capacity by 37.5%.

  • Outlook

The long-term drivers of growth in our sectors, including the growing global demand for aquaculture products, which we expect to grow at around 5% per annum, will continue to benefit Benchmark for many years to come.  In addition to capturing the opportunities for the products and services we have today, an important driver of our organic growth will be the delivery of commercial sales from our robust pipeline of new products, and although the exact timing of new product launches is difficult to predict, an increasing number of these are expected to come to market during 2017 to 2019.

The current year has started in line with the Board's expectations with some continued softness in the Asian shrimp farming market occasioned by the disease challenges faced by producers there.  We expect this to recover once these challenges are met, however the exact timing of the predicted uplift remains uncertain.  At the same time the salmon farming market which represents more than a third of Benchmark's business is experiencing record high prices which look likely to be sustained.  With new markets and customers opening up as our integrated offering becomes more familiar to the participants in the global 'Blue Revolution', we look forward to the future with great confidence.


*Annual report signed The Hon. Alexander Hambro, Chairman in Benchmark Holdings,24 January 2017

Financial highlights:

·     Revenue increased by 148% to £109.4m (2015: £44.2m). Like for like sales, excluding businesses acquired in either 2016 or 2015, increased by 20% to £29.8m (2015: £24.7m)

·     EBITDA from Trading Activities1 grew by £19.9m to £22.3m (2015: £2.4m)

·     Adjusted EBITDA2 increased by 14.9m to £9.2m (2015: loss of £5.7m)

·     Animal Health division successfully recovered sales on Salmosan / Byelice

·     Acquisition of INVE Aquaculture in December 2015 for US$342m (c.£230m) created new Advanced Animal Nutrition division

·     Integration of INVE went to plan and first revenue synergies were achieved

·     Temporary closure of Chilean border to Icelandic produced salmon eggs impacted Breeding and Genetics revenues

·     Operating loss of £20.5m (2015: £11.6m) after increase in investing activities to £26.7m (2015: £10.1m), including £12.9m of expensed acquisition and integration costs

·     Expensed R&D increased by 77% to £11.7m (2015: £6.6m)


£m     2016 2015
Total revenue     109.4 44.2
Gross profit     50.8 16.1
Gross profit percentage     46% 36%
Operating expenses - Trading Activities     (28.5) (13.7)
EBITDA from Trading Activities     22.3 2.4
Profit / (Loss) before tax from Trading Activities   4.3 (1.3)
Total net costs of Investing Activities     (26.7) (10.1)
Loss before tax     (22.4) (11.4)
Earnings / (Loss) per share from Trading Activities (pence) 1.79 (1.13)
Basic loss per share (pence)     (4.39) (5.96)


EBITDA from Trading Activities - excludes costs relating to Investing Activities from reported IFRS numbers. Investing Activities comprise exceptional restructuring costs, acquisition costs, pre-operational expenses for new ventures and research and development expenditure.

2 Adjusted EBITDA - EBITDA before exceptional and acquisition costs.