A successful year of revenue growth, improving margins, and strategic and innovative progress
Benchmark announces results for year ended 30 September 2018
2018 was a successful year for Benchmark. The Group achieved good growth in revenues and underlying earnings, and made substantial progress in implementing its strategy. Particular highlights in the year included the successful commercial scale trials for our next generation sea lice treatment, the opening of our state of the art salmon egg facility in Norway, and the successful trials for our disease resistant shrimp in three Asian markets.
“The growth drivers for our business remain strong, with the increasing need for solutions that improve productivity in the growing aquaculture sector to support sustainable food production meaning that the areas of the market we address are growing considerably faster than the overall aquaculture market.
The Group has started the current financial year trading ahead of the same period last year, and is trading in line with expectations for the full year. Trading has commenced strongly in Genetics, with high demand for our disease and sea lice resistant salmon eggs. Our Advanced Nutrition business in shrimp has started relatively slowly due to temporary volatility in the global shrimp market, but the outlook from spring onwards is positive. In Animal Health, we are planning to extend trials of our next generation sea lice treatment into new markets in 2019 and we are making substantial progress towards establishing a partnership for our companion animal products.
Over the next 18 months we expect to see our investment in a number of areas, such as our next generation sea lice treatment, our disease resistant shrimp, new aquaculture vaccines and probiotics, together with our new facility in Norway, starting to deliver, resulting in high growth in revenues, attractive margins and cash generation, which will increase our financial flexibility and deliver attractive shareholder returns.”
- Revenue increased by 13% in constant currency to £151.5m
- Genetics up 21% in constant currency; Advanced Nutrition up 9% in constant currency; and Animal Health up 7% in constant currency
- Gross margin for the Group increased to 49% (2017: 45%)
- Adjusted EBITDA up 68% to £17.0m (86% in constant currency) reflecting 36% increase in Genetics, a 22% increase in Advanced Nutrition
- Adjusted EBITDA margin increased to 11% (2017: 7%), with Genetics and Advanced Nutrition achieving margins of 23% and 25% respectively
- Total investment in R&D of £19.4m, of which £12.0m was expensed; lower expensed R&D in the period reflects increased spend on later stage products including the next generation sea lice treatment
- Net debt increased to £55.7m (2017: £23.9m) with year end bank covenant leverage67x against threshold of 3.25x and interest cover of 8.3x against a threshold of 4.0x.
- £32.7m capital expenditure in new production facilities completed in the period and investment associated with field trials of next generation sea lice treatment
Continued innovation and pipeline delivery:
- Successful field trials of next generation sea lice treatment with three of the world’s largest salmon producers showing close to 99%+ efficacy, excellent fish welfare and no environmental impact
- Six new products launched across the Group of which two are in Genetics and four in Advanced Nutrition
- Successful trials of disease resistant shrimp in Thailand, Vietnam and China
- Progress in development of sea bass/bream vaccines with good performance in large scale trials
Capacity increased and expanded into new markets:
- Start of production at new land-based salmon egg facility in Norway, increasing capacity by 75% to meet growing demand for our products
- Joint Venture with AquaChile to penetrate world’s second largest salmon market
Progress with strategic review:
- Decision to exit certain non-core activities
- Re-prioritisation of R&D effort
Strengthened the Board and Management Team:
- Peter George joined as Chairman
- Recruitment of Chief Scientific Officer and Group Marketing Director
- Adjusted EBITDA which reflects underlying profitability, is earnings before interest, tax, depreciation, amortisation, impairment, exceptional items and acquisition related expenditure.
- Adjusted Operating Profit is operating loss before exceptional items including acquisition related items and amortisation of intangible assets excluding development costs
- Adjusted profit before tax is earnings before tax, amortisation and impairment of acquired intangibles, exceptional items and acquisition related expenditure
- Net debt is cash and cash equivalents less loans and borrowings
- Constant Currency reflects the movement after retranslating 2018 figures using the same foreign exchange rates experienced in 2017.
- Leverage is calculated per the facility agreement that governs the Group’s principal revolving credit facility which excludes ringfenced non-recourse debt in respect of the new salmon breeding joint venture in Norway