Benchmark Holdings plc
(“Benchmark”, the “Company” or the “Group”)
Q3 Results
(Three months and nine months ended 30 June 2024)
Solid performance in Genetics and Advanced Nutrition amidst continuing soft shrimp markets
Completed steps to streamline Health and transition Ectosan® Vet and CleanTreat® business model
In compliance with the terms of the Company’s unsecured Green bond, which requires it to publish quarterly financial information, Benchmark, the aquaculture biotechnology business, announces its unaudited results for the three months ended 30 June 2024 (the “Period” or “Q3 FY24”), which constitutes the third quarter for the fiscal year (“FY”) 2024, and its year to date unaudited results for the nine months ended 30 June 2024 (“Q3 YTD FY24”). All Q3 FY24, Q3 FY23, Q3 YTD FY24 and Q3 YTD FY23 figures quoted in this announcement are based on unaudited accounts.
Financial highlights
Q3 FY24
• Group revenues of £30.7m were 10% below prior year (-7% at constant exchange rate “CER”) driven by:
o Advanced Nutrition: good trading with 4% increase against the prior year (+11% CER) despite continuing softness in the shrimp market
o Genetics: solid trading albeit revenues were 18% (17% CER) below Q3 FY23 reflecting a shift from direct egg sales to indirect sales through Salmar Genetics, the Group’s JV in Norway, as well as a timing difference in harvest income compared to last year
o Health: revenues were 43% below last year (-41% CER) reflecting the decommissioning of the two CleanTreat® units as part of the planned transition to a new business model for Ectosan® Vet and CleanTreat®
• 15% increase in Adjusted EBITDA excluding fair value (“FV”) movement of biological assets (+19% CER) driven by:
o Progress across all Genetics growth vectors including Chile, shrimp and genetic services
o Higher contribution from the Group’s JV in Norway, and
o Positive impact of streamlined organisation and infrastructure in Health
• Adjusted EBITDA margin excluding FV movement of biological assets was 15% (Q3 FY23: 12%) resulting from 28% margin in Genetics (Q3 FY23: 16%), 11% margin in Advanced Nutrition (Q3 FY23: 21%) and breakeven in Health (Q3 FY23: -27%)
• Operating Loss was £6.5m (Q3 FY23: £4.0m loss)
• Ample liquidity and headroom
o Cash of £17.0m and liquidity of £34.2m (cash and available facility) as of 30 June 2024
o Net debt (excluding lease liabilities) £63.9m as at 30 June 2024 (31 March 2024: £56.8m; 30 September 2023: £45.6m)
Q3 YTD FY24
• Group revenues were £110.9m, 17% below the prior year (-11% CER) due to:
o Soft conditions in the shrimp markets throughout the year
o Normalised egg volumes in Genetics against last year coupled with shift from direct egg sales to indirect sales through the Group’s JV in Norway
o Lower Health revenues following the decommissioning of the two CleanTreat® units
• Adjusted EBITDA excluding FV movement of biological assets was 17% below the prior year (-10% CER) with an increase in Genetics offset by a decrease in Advanced Nutrition and Health
• Adjusted EBITDA margin excluding FV movement from biological assets was in line with last year at 20% (Q3 YTD FY23: 20%) resulting from 24% margin in Genetics (Q3 YTD FY23: 18%), 20% margin in Advanced Nutrition (Q3 YTD FY23: 24%) and 17% margin in Health (Q3 YTD FY23: 25%)
• Operating loss was £10.2m (Q3 YTD FY24: £3.0m)
Business Area Highlights
• Advanced Nutrition – good trading in Q3 FY24 against backdrop of continuing softness in the shrimp market
o Q3 revenues were 4% ahead of the prior year with good trading partially offset by forex headwinds (+11% CER)
o YTD revenues were 1% above the prior year on a constant exchange rate; 7% below including forex impact
o Q3 Adjusted EBITDA was lower at £1.8m (Q3 FY23: £3.4m) reflecting lower margins due to product mix and higher logistics costs as a result of temporary disruption to trading routes with freight vessels avoiding the regional insecurity of the Suez Canal by travelling around Cape of Good Hope. Adjusted EBITDA margin was 11% (Q3 FY23: 21%)
o YTD Q3 FY24 Adjusted EBITDA margin was 20% (YTD Q3 FY23: 24%)
o The shrimp market remained soft with green shoots not yet translating into market recovery. Despite this the fundamentals remain strong.
We maintain commercial focus and take action to optimise our performance and competitive position including by expanding our product portfolio and strengthening our presence in key markets
Regulators and market participants taking steps to support the aquaculture sector e.g. reduction of import duty on aquaculture supplies in India and development of value-added shrimp products in Ecuador to stimulate exports
• Genetics – increase in underlying profitability driven by progress across all growth vectors – Chile, shrimp and genetic services
o Q3 revenues 18% below Q3 FY23 (-17% CER) driven by shift against last year from direct egg sales to indirect sales through the Group’s JV in Norway, the benefit of which is reflected in EBITDA and timing difference in harvest income compared to last year
o YTD Q3 revenues -17% (-13% CER) compared to last year which benefitted from supply constraints in the market in the first part of the year
o 46% increase in Q3 Adjusted EBITDA excluding FV movement of biological assets driven by:
Chile – Adjusted EBITDA excluding FV movement of £0.5m (Q3 FY23: £0.9m loss)
Shrimp – Adjusted EBITDA loss reduced from £0.8m to £0.5m
Higher contribution from the JV in Norway
o Q3 Adjusted EBITDA margin excluding FV movement 28% (Q3 FY23: 16%)
o YTD Q3 Adjusted EBITDA margin excluding FV movement was 24% (Q3 YTD FY23: 18%)
• Health – significant restructuring and streamlining as part of transition to new business model for Ectosan® Vet and CleanTreat®
o Q3 revenues 43% below last year (-41% CER) reflecting the decommissioning of the CleanTreat® units as part of the planned transition to a new business model for Ectosan® Vet and CleanTreat®
Salmosan® Vet revenue increased 17%
o Q3 Adjusted EBITDA loss reduced to nil (Q3 FY23 loss: £1.0m) showing the positive impact of restructuring actions in the seasonally quiet third quarter
o YTD Q3 Adjusted EBITDA of £2.3m (YTD Q3 FY23: £5.6m); YTD Q3 Adjusted EBITDA margin of 17% (YTD Q3 FY23: 25%)
o Business rightsized to deliver Salmosan® Vet solution which will drive profitability and cash generation post restructuring
o Maintained capability to deploy Ectosan® Vet and CleanTreat®, a proven effective solution to address sea lice, subject to customer investment in CleanTreat® infrastructure
Current trading and outlook
• Trading well against backdrop of market headwinds in Advanced Nutrition and the restructuring in Health which have an impact on short term performance but support near and long term prospects
o Good visibility of salmon egg deliveries in Genetics for the remainder of the year and continued progress in growth vectors
o Resilience in Advanced Nutrition underpinned by commercial focus and streamlined efficient organisation
o Profitable and cash positive Health business following restructuring and underpinned by good performance of Salmosan® Vet
• Actions taken during year the bring all business areas to profitability and set them on the path to deliver shareholder value