Benchmark Hlgs PLC - Q4 and FY Trading Update & Notice of Results
Information within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulations (EU) No. 596/2014.
("Benchmark", the "Company" or the "Group")
Q4 and Full Year Trading Update & Notice of Results
Challenging market conditions led to disappointing performance
and the commencement of restructuring of the Group
Benchmark, the aquaculture health, nutrition and genetics business, provides the following trading update for its fourth quarter and year ended
All FY19 figures quoted in this announcement are based on unaudited accounts.
· As previously announced, results for the year were impacted by adverse conditions in the shrimp and seabass/seabream markets, which significantly affected Advanced Nutrition, the Company's largest division
· Restructuring of the Group commenced, accelerating the disposal and discontinuation of non-core activities which primarily includes businesses in the Knowledge Services division and veterinary services in
· Progress towards commercial launch of the Company's next generation sea lice treatment (product candidate BMK08) and its specific pathogen resistant (SPR) shrimp in
· Total Revenues and Adjusted EBITDA2 including Continuing and Discontinued Operations are expected to be in line with current market expectations
· Revenues from Continuing Operations are expected to be c.
· Total revenues including Continuing and Discontinued Operations are expected to be c.
· Adjusted EBITDA2 from Continuing Operations is expected to be in the region of
· Total Adjusted EBITDA2 including Continuing and Discontinued Operations is expected to be in the region of
· Adjusted EBITDA is driven by lower sales in Advanced Nutrition and lower revenues from commercial scale field trials, offset by an increase in sales and margins in Genetics and one-off other income
· Total R&D investment is expected to increase by c.7% driven by products close to launch and additional investment in Genetics and Advanced Nutrition to maintain leadership in our core markets
· Capex is expected to reduce significantly to c.
· Net debt3 at the end of the year was
· Free cash flow4 was an outflow of c.
· Liquidity5 was
· Impairment of intangible and tangible assets in FY19 is expected to be in the range of
(1) EBITDA is earnings before interest, tax, depreciation and amortisation and impairment.
(2) Adjusted EBITDA is EBITDA1, before exceptional items and acquisition related expenditure.
(3) Net debt is cash and cash equivalents less loans and borrowings.
(4) Free cashflow is defined as operating cashflow less investment capex (including capitalised development costs).
(5) Liquidity is defined as undrawn facilities plus cash balances.
· Appointment of
· Restructuring commenced with disposals and cost reductions accelerated. 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.
o Appointed advisers for disposal of businesses in the Knowledge Services division and veterinary services; marketing well underway and good level of interest received
o Discussions with alternative partners for the commercialisation of the Company's companion animal products are ongoing
Restructuring and management changes are expected to result in exceptional charges in FY2019 and FY2020.
"It is disappointing to report a performance which is below that expected at the beginning of the financial year largely due to market conditions in Advanced Nutrition.
"Following the management changes announced in August, the Company has accelerated its programme of efficiencies including the disposal and exit from non-core businesses and the implementation of a cost saving plan.
"During the year the Group made good progress towards the launch of product candidate BMK08 which, together with its co-dependant technology CleanTreat®, has the potential to be transformational for the industry, delivering a solution with zero environmental impact to one of the industry's biggest challenges.
"The Company is considering the optimal strategy to take CleanTreat® from trial to commercial scale given its importance to product candidate BMK08 and its broader industry wide applications.
"The market has a growing need for solutions that improve the sustainability of food production in aquaculture. Benchmark's focus on delivering products and solutions that improve animal health and welfare, and that reduce environmental impact, positions it as a leader in improving sustainability standards in aquaculture.
"While the timing of the recovery in the shrimp and seabass/seabream markets is uncertain, I remain confident that the actions we are taking and the products we are launching will move the Group from its R&D investment phase into commercial profitability."
· Opening of state of the art, land-based salmon egg facility in
· Dissolution of JV with AquaChile. Recovery of original investment which will be reinvested in a wholly owned local salmon egg production facility in the world's second largest market
· Production of specific pathogen resistant (SPR) shrimp commenced in
· Increased sales of Salmosan as a result of high levels of sea lice, particularly in
· Product candidate BMK08 continued to show c.99% efficacy. Regulatory process progressing towards approval in late CY2020
· Winner of Aquaculture Innovation Award for CleanTreat®, the Company's breakthrough purification system which removes medicinal residues from bath treatments including, but not limited to, BMK08
· In combination with CleanTreat®, BMK08 is potentially transformative for the industry, addressing the urgent need for a highly efficacious treatment eliminating the environmental impact and improving animal health and welfare
· Increase in market share in health products and diets which demonstrated relative resilience in challenging market conditions
· Continued innovation with 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
· Increased capacity at production plant in
· The shrimp and seabass/seabream markets continue to show weakness and although some recovery is expected they are unlikely to recover to 2018 levels in 2020. The outlook in the salmon market remains positive
· Overall, the Company expects to deliver underlying Adjusted EBITDA from Continuing Operations (before one-off other income) in line with this year in FY 2020
· The Company expects 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.
Details of analyst / investor call today
Notice of Results
The Company will announce its full results for the year ended
Please contact [email protected] if you would like to register your interest in attending the results conference call.
Management and Financial Report
Performance in the year was significantly affected by market conditions in the shrimp and Mediterranean sea bass/bream markets, as well as by changes and delays in our programme of commercial scale trials for some of our pipeline products.
The Company expects to report revenues from Continuing Operations of c.
Liquidity and cash management continued to be a priority through this period of investment ahead of the launch of the Company's next generation sea lice treatment. The Company has accelerated its programme of disposals and cost reductions to reallocate capital from non-core areas to fund its product development programme and Continuing Operations while maintaining sufficient liquidity.
Challenging markets in Advanced Nutrition
2019 was a challenging year for Advanced Nutrition. Our main customers faced challenges in their shrimp business with declining prices and negative margin development, leading to reduced production, with an impact on demand for our products. Production in all major shrimp markets contracted in 2019, with the exception of
The Mediterranean seabass and seabream markets were also affected by oversupply after a period of high stocking which affected prices, reaching levels not seen since 2012. In
As a result, revenues in Advanced Nutrition are expected to be down c. 10% to c.
The division's health and diets segments were more resilient to market conditions with sales expected to decrease by c.5%, and the Company was able to increase its market share in both segments.
Good performance in Genetics and progress towards launch of disease resistant shrimp
Our salmon genetics business continued to perform well and to deliver growth driven by an increase in salmon egg sales, and pricing that reflects our continued innovation. Genetics revenues are expected to be c.
The Company made progress towards the launch of its specific pathogen resistant (SPR) shrimp in
The Company made good progress towards the launch of product candidate BMK08, conducting additional large-scale trials which continued to show c.99% effectiveness as well as excellent animal welfare and environmental credentials. There is increasing recognition in the industry of the breakthrough nature of our solution and growing interest from customers while the regulatory approval process is progressing according to plan. Sea lice continues to represent the most important biological challenge in the salmon industry.
CleanTreat®, the Company's proprietary system to remove medicinal residues from treatment water, was awarded a prestigious industry innovation award. CleanTreat® addresses two of the biggest concerns in the aquaculture industry, disease control and environmental impact and has broad applications beyond the Company's sea lice treatment. The Company is considering the optimal strategy to take CleanTreat® from trial to commercial scale given its importance to product candidate BMK08 and its broader industry wide applications, including alternative funding strategies with support from its major shareholders.
During the year the Company conducted a review of its Health pipeline led by
The Company experienced longer timescales than anticipated in the development of its seabass/seabream vaccines, and in establishing commercial trials for a number of its pipeline products, which had an impact on Group revenues and on the expected timing for commercial launch. The Company is adopting a more conservative approach to forecasting development timescales and revenues from new products. It is expected that the first vaccine for the seabass/seabream market will be launched in H12020 CY.
Knowledge Services: progress towards disposals
Knowledge Services revenue (comprising Discontinued Operations) is expected to be c.
Revisions to the financial projections for the Advanced Nutrition division resulting from more difficult market conditions and consequent constraints on cash investment, have resulted in the carrying value of the intangible assets no longer being fully supported by its discounted cash flows. As a result, the value of the intangibles is expected to be impaired.
In addition, as the Group has decided to dispose of and exit several non-core activities there has been a need to consider whether the anticipated net proceeds support the carrying value of the associated tangible and intangible assets. In some instances it is anticipated that this will not be the case in relation to certain activities which we are exiting, and hence impairment provisions are expected to be made in the year.
Together, these two factors are expected to lead to an impairment in the range of
Free Cash flow4
Free cash flow4 was an outflow of c.
Net Debt3 and Liquidity5
The Company completed a debt refinancing in
At year end Net Debt3 was
The refinancing resulted in increased borrowing costs and a consequent increase in net finance costs.
Q4 2019 total revenues are expected to be c.
Weakness in the shrimp and sea bass/bream markets continues and while some recovery is expected it is unlikely to recover to 2018 levels in 2020. The outlook in the salmon market remains positive.
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.
For further information, please contact:
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Tel: 020 3696 0630
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Numis (Broker and NOMAD)
Tel: 020 7260 1000
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Tel: 020 3128 8742
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
Quick facts: Benchmark Holdings PLC
Market Cap: £180.19 m
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