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REG - Benchmark Hlgs PLC - Second Quarter and Interim results

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RNS Number : 8547L  Benchmark Holdings PLC  18 May 2022

18 May 2022

 

Benchmark Holdings plc

 

("Benchmark", the "Company" or the "Group")

 

Second Quarter and Interim results for the six months ended 31 March 2022

 

Excellent H1 and Q2 results building on strong FY21 performance

 

Benchmark (LSE: BMK), the aquaculture biotechnology company, announces its
unaudited interim results for the six months ended 31 March 2022 (the
"Period"). The Company also announces its unaudited results for the three
months ended 31 March 2022 in compliance with the terms of its senior secured
bond.

Financial highlights

·    Excellent H1 FY22 performance:

o  +33% growth in revenues (+32% at constant exchange rate (CER)) to £79.2m
(H1 FY21:£59.5m)

o  100% increase in Adjusted EBITDA (+96% CER) ) to £15.9m (H1 FY21: £7.9m)

o  149% increase (143% CER) in Adjusted EBITDA excluding fair value movement
in biological assets to £14.8m (H1 FY21: £6.0m)

o  Adjusted EBITDA margin increased to 20% (H1 FY21: 13%)

o  H1 FY22 operating cash inflow £2.0m (H1 FY21: cash outflow of £1.5m)

·    Q2 performance:

o  Represents fourth consecutive quarter of year-on-year and
quarter-on-quarter Adjusted EBITDA growth; Adjusted EBITDA rose by 72% (+68%
CER) to £8.4m (Q2 FY21: £4.9m)

o  Loss before tax significantly narrowed to (£1.5m) (Q2 FY21:(£2.7m))

·    Net debt excluding lease liabilities £50.6m (30 September 2021:
£56.9m)

o  Cash and cash equivalents of £46.3m after cash inflow of £6.0m,
including £20.1m raised from a successful cash placing in the period to
maintain growth momentum

Operating highlights

·    Good progress on roll-out of Ectosan® Vet and CleanTreat®

o  Solution continues to operate effectively delivering 99%+ efficacy and
good animal welfare

o  Growing customer base, third CleanTreat® system ordered and development
of new system configuration underway

o  Marketing Authorisation for second re-use of treatment water, increasing
operational efficiency and customer appeal, was granted post period-end

·    Continued strong momentum in Advanced Nutrition with strong growth in
revenues and earnings for all product groups and areas.

·    Continued growth in salmon egg sales in Genetics with contracted sales
underpinning a strong outlook for the year

·    Commercialisation of specific pathogen-resistant (SPR) shrimp
progressing well with good take-up in key markets including India

·    Sustainability: investing in solar panels at main production facility
in Thailand which will contribute significantly towards Net Zero targets

Current trading and outlook

·    Trading in line with expectations:

o  Strong outlook for salmon egg sales for remainder of the year

o  Healthy outlook for the year in Advanced Nutrition, phased towards Q4 due
to seasonality and normal shift in revenues across quarters

o  Continued effort to embed Ectosan® Vet and CleanTreat® into customers'
sea lice strategies

·    Decision to pursue a listing on Euronext Growth Oslo in H2 calendar
year 2022:

o  As previously announced, the Company engaged DNB Markets and Pareto
Securities as Joint Global Coordinators in connection with its assessment of a
listing in Oslo

o  Intention to uplist to the Oslo Stock Exchange (Oslo Børs) within the
following twelve months

o  Listing subject to favourable market conditions

 £m                                                                    % CER               Q2 FY21  % CER

                                                   H1 FY22   H1 FY21   H1 FY22   Q2 FY22            Q2 FY22
 Revenue                                           79.2      59.5      +32%      39.2      30.4     +26%

                                                   +33%                          +29%
 Adjusted
 Adjusted EBITDA(1)                                15.9      7.9       +96%      8.4       4.9      +68%

                                                   +100%                         +72%
 Adj. EBITDA excluding biological asset movements  14.8      6.0       +143%     7.3       4.2      +69%

                                                   +149%                         +74%
 Adjusted Operating Profit(2)                      4.9       4.4       +3%       2.4       3.2      -31%

                                                   +11%                          -25%
 Statutory
 Operating loss                                    (2.2)     (4.6)               (0.7)     (1.4)
 Loss before tax                                   (5.1)     (3.3)               (1.5)     (2.7)
 Basic loss per share (p)                          (1.32)    (0.57)              (0.54)    (0.46)
 Net debt(3)                                       (81.4)    (56.5)              (81.4)    (56.5)
 Net debt(3) excluding lease liabilities           (50.6)    (42.5)              (50.6)    (42.5)

 

Business Area summary

 £m                                                                               %CER*                              % CER*

                                                              H1 FY22   H1 FY21   H1 FY22   Q2 FY22   Q2 FY21   Q2 FY22
 Revenue
 Advanced Nutrition                                           42.0      35.0      +19%      23.0      19.9      +12%

                                                              +20%                          +15%
 Genetics                                                     26.6      22.1      +18%      11.4      9.5       +18%

                                                              +20%                          +20%
 Animal Health                                                10.7      2.3       +359%     4.9       1.0       +372%

                                                              +358%                         +371%
 Adjusted EBITDA(1)
 Advanced Nutrition                                           11.5      6.2       +81%      7.2       5.2       +32%

                                                              +84%                          +36%
 Genetics                                                     5.7       6.0       -7%       2.4       2.1       +14%

                                                              -5%                           +15%
 -       Net of fair value movements in biological assets     4.7       4.0       +12%      1.3       1.4       -9%

                                                              +16%                          -7%
 Animal Health                                                0.1       (2.6)               (0.5)     (1.4)

 

 

 

*Constant exchange rate (CER) figures derived by retranslating current year
figures using previous year's foreign exchange rates

(1) Adjusted EBITDA is EBITDA (earnings before interest, tax, depreciation and
amortisation and impairment), before exceptional items including acquisition
related expenditure

(2) Adjusted Operating Profit is operating loss before exceptional items
including acquisition related items and amortisation of intangible assets
excluding development costs

(3) Net debt is cash and cash equivalents less loans and borrowings

 

·    Advanced Nutrition

o  H1 FY22:

§ Revenue up 20%, with higher sales in all product areas and geographical
regions reflecting success of enhanced commercial organisation and recovering
shrimp market

§ Adjusted EBITDA up 84% driven by excellent cost control and revenue growth

§ Adjusted EBITDA margin significantly increased to 27% (H1 FY21: 18%)

o  Q2 FY22

§ Revenue +15% and Adjusted EBITDA +36% translated into an Adjusted EBITDA
margin of 31% for the quarter (Q2 FY21: 26%)

o  Continue to launch new technologies

§ Launch of automatic Artemia separation tool "Sep-Art Automag" delivering
sustainability benefits

o  Post period end, closure of Thailand trial facility as part of ongoing
optimisation of operations

·    Genetics

o  H1 FY22:

§ Revenue up 20% from prior year as a result of higher harvest income and egg
revenues

§ Adjusted EBITDA up by 16% excluding fair value movements in biological
assets

o  Q2 FY22

§ Revenue 20% up from prior year

§ Adjusted EBITDA down 7% excluding fair value movements in biological
assets, reflecting ongoing investment in growth areas - Chile, SPR shrimp and
tilapia

o  SPR shrimp sales ahead of expectations particularly in India and Indonesia

o  Obtained organic certification for salmon eggs in Chile

o  First deliveries of eggs from new incubation centre in Iceland showing
excellent quality

o  One Benchmark: the Group's cross-selling efforts delivered a new contract
post period end, with the largest sea bass/sea bream producer in Turkey to
provide genetic improvement services

·    Animal Health

o  H1 FY22

§ Revenue +358% reflecting revenues from Ectosan® Vet and CleanTreat®

§ Adjusted EBITDA showed profit of £0.1m (H1 FY21: (£2.6m) loss)

o  Q2 FY22

§ Revenue +371% reflecting revenues from Ectosan® Vet and CleanTreat®

§ Adjusted EBITDA loss of (£0.5m) (Q2 FY21: £(1.4m) loss)

§ Q2 FY22 adversely impacted by extreme weather conditions in January which
made it impractical to carry out Ectosan® Vet and CleanTreat® treatments

o  Progress on the roll-out of Ectosan® Vet and CleanTreat® as mentioned
above

o  Post period end

§ Granted Marketing Authorisation ("MA") for re-use of treatment water,
increasing operational efficiency and customer appeal

§ The Company submitted an MA application for Ectosan® Vet in the Faroe
Islands

Trond Williksen, CEO, commented:

"Benchmark delivered an excellent performance in the first half of the year.
Evidence continues of the benefits of a restructured organisation with renewed
commercial focus and financial discipline driving growth and returns.

 

The Group delivered strong double digit revenue growth across all our business
areas, a doubling of Adjusted EBITDA and a significant increase in Adjusted
EBITDA margin. Q2 represented the fourth consecutive quarter of substantial
growth in the Group's revenues and Adjusted EBITDA.

 

We have visible growth opportunities underpinned by existing infrastructure
and are uniquely positioned in an industry with strong fundamentals driven by
megatrends."

 

Details of analyst / investor call today

 

There will be a call at 9.00am UK time today for analysts and investors. To
register for the call please contact MHP Communications on +44 (0)20 3128 8990
or 8742, or by email on benchmark (mailto:benchmark@mhpc.com) @mhpc.com
(mailto:benchmark@mhpc.com)

 

Enquiries

 

 For further information, please contact:
 Benchmark Holdings plc                           benchmark@mphc.com
 Trond Williksen, CEO
 Septima Maguire, CFO
 Ivonne Cantu, Investor Relations

 Numis (Broker and NOMAD)                         Tel:  020 7260 1000
 James Black, Freddie Barnfield, Duncan Monteith

 MHP Communications                               Tel:  020 3128 8990

Katie Hunt, Reg Hoare, Charlie Protheroe
               benchmark@mhpc.com (mailto:benchmark@mhpc.com)

 

About Benchmark

Benchmark is a market leading aquaculture biotechnology company. Benchmark's
mission is to drive sustainability in aquaculture by delivering products and
solutions in genetics, advanced nutrition and health which improve yield,
growth and animal health and welfare.

Through a global footprint in 26 countries and a broad portfolio of products
and solutions, Benchmark addresses many of the major aquaculture species -
salmon, shrimp, sea bass and sea bream, and tilapia,  in all the major
aquaculture regions around the world. Find out more at www.benchmarkplc.com

 

Management Report

 

The Group delivered an excellent performance in the first half of the year
reporting a 33% growth in revenue and 149% growth in Adjusted EBITDA excluding
fair value movements from biological assets. Performance was strong across all
business areas with each business area reporting at least double digit growth
in revenues.

 

The commercial traction in Advanced Nutrition resulting from our refocused
commercial organisation continued, with growth in every product area and
geography. In Health the roll-out of Ectosan® Vet and CleanTreat® resulted
in a significant increase in revenues and profit. Genetics continued to
execute its strategy of organic growth in well established markets achieving
good revenue growth, while expanding and investing in opex in new areas such
as SPR shrimp, salmon in Chile and tilapia.

 

Operating costs in H1 FY22 were £19.9m, a 6% increase from the prior year due
to higher activity levels, however the increase was significantly below
revenue growth, demonstrating the operational leverage in the business
alongside the well embedded cost discipline across the Group.

 

R&D expenses at £3.2m, were 11% below H1 FY21. Total R&D investment
including capitalised development costs was £4.6m, 21% below the prior year
(H1 FY21: £5.8m) reflecting the transition to the commercial phase of
Ectosan® Vet and CleanTreat®.

 

Adjusted EBITDA excluding fair value movement from biological assets was
£14.8m, +149% up from £6.0m in H1 FY21 as a result of higher revenues,
increased asset utilisation and ongoing cost control. As a result, the Group
achieved an Adjusted EBITDA margin of 20% (H1 FY21: 13%).  Depreciation and
amortisation increased from the comparative period last year to £18.9m (H1
FY21: £11.7m) due to the depreciation of the Cleantreat® units and the
leased vessels used in the CleanTreat® operation and the commencement of
amortisation of the capitalised Ectosan® Vet and CleanTreat® development
costs following the launch at the end of FY21.  These higher costs were more
than offset by the better Adjusted EBITDA and as a result, the Group reported
a significant improvement in its operating result, reducing the operating loss
in the period by more than half to (£2.2m) in the period (H1 FY21: operating
loss of (£4.6m)).

 

Net finance costs for H1 FY22 were £3.0m (H1 FY21: income £1.4m).  The main
year on year movements were lower gains on fair value of financial instruments
and forex gains of £0.6m (H1 FY21: £2.4m) and  £0.5m (H1 FY21: 3.3m)
respectively, but there was also a reduction in borrowing costs on the NOK
bond of £0.4m due to the higher interest rates suffered in the previous year
before the NOK bond was listed.  These were offset by higher interest charges
on right of use assets from the two CleanTreat vessels in operation this year.
 This left loss before tax in H1 FY22 £1.8m higher than the previous year at
£5.1m (H1 FY21: £3.3m).

 

Although loss before tax is higher in H1 FY22 than H1 FY21, the tax charge has
increased to £3.6m (H1 FY21: £0.2m credit) due to higher profits in the
Advanced Nutrition business area in territories where there is no opportunity
for losses to be utilised.  Loss after tax was £8.8m (H1 FY21: £3.1m)

 

The Group reported a net operating cash inflow of £2.0m after an increase in
working capital of £13.5m related to the growth of sales and increase of
associated inventory levels in Ectosan® Vet and Advanced Nutrition, and tax
payments of £3.0m. Net cash outflow from investing activities was £6.6m of
which PPE capex was £5.1m primarily in Genetics (£2.8m) and Health (£1.7m)
and capitalised R&D was £1.5m (mainly in SPR Shrimp). Net cash inflow
from financing activities of £10.7m, includes an equity raise of (net)
£20.1m, £4.8m of lease payments and the NOK bond coupon payments. Our cash
position at the end of the period was £46.3m.

 

Advanced Nutrition

 

Advanced Nutrition delivered an excellent result in the first half of the year
continuing the strong performance in FY21 and in Q1 FY22, with revenues up 20%
and Adjusted EBITDA increasing by 84%. All product areas and geographic
regions achieved growth - Artemia (+19%), Diets (+18%) and Health (+11%).  By
region the Americas were up 23%, Asia +7% and Europe +9%.  The shrimp markets
continue to show recovery creating a positive outlook for this area of our
business.

 
 

With the growth in sales, asset utilisation increased, driving operational
leverage and leading to Adjusted EBITDA of £11.5m (H1 FY21: £6.2m), and an
Adjusted EBITDA margin of 27% (H1 FY21: 18%).

 

During the period we completed an energy efficiency study at our main
production facility in Thailand identifying significant opportunities to
reduce our carbon footprint towards our Net Zero targets. As a result we took
the decision to invest in a solar panel installation which is expected to
significantly reduce the carbon footprint of the facility once complete.

 

Post period end, as part of our ongoing efforts to optimise our operations, we
closed our trial facilities in Thailand, which increases our flexibility and
removes the investment associated with maintaining state of the art
facilities.

 

Genetics

Genetics delivered a good performance in the first half of the year with
revenues of £26.6m, 20% above the prior year (H1 FY21: £22.1m) driven by
higher harvest revenues from our broodstock licence, as well as higher
revenues from salmon eggs and SPR shrimp.

Revenues from salmon eggs increased by 2% while SPR shrimp revenues grew more
than three-fold reflecting the success of our commercial launch post test
market in FY21.  SPR shrimp sales were ahead of expectations particularly in
India and Indonesia. We won new genetics services contracts with major sea
bass/bream and tilapia producers. We completed the expansion of our Tilapia
facility in Miami, following some delays due to global supply shortages,
meaning that we now have the infrastructure in place to produce tilapia
year-round.

Adjusted EBITDA for H1 FY22 excluding fair value movements of biological
assets was £4.7m, 16% ahead of the prior year (H1 FY21: £4.0m). Including
fair value movements Adjusted EBITDA for the first half was £5.7m, 5% below
the same period last year.

We continued to make progress in our growth areas with the first deliveries of
salmon eggs from the new incubation centre in Iceland showing excellent
quality. We completed expansion projects in the US for our SPR shrimp and
tilapia. In Chile, we continued the operational ramp up of our facilities to
enable us to deliver a steady supply to the market, and we obtained organic
certification for our salmon eggs.

Looking forward to the second half of FY22 we already have contracted sales
for salmon eggs underpinning a strong FY22 performance.

 

Health

Revenues in H1 FY22 increased to £10.7m (H1 FY21: £2.3m) due to sales from
Ectosan® Vet and CleanTreat® which were launched in Q4 FY21. Salmosan sales
were 7% below the prior year primarily as a result of lower sales in Chile
offset by improved sales in Canada.  Adjusted EBITDA was a profit of £0.1m
(H1 FY21: loss of £(2.6)m) as a result of the higher revenues.  £2.2m of
the revenue in the period (H1 FY21: £nil) was derived from recharging vessel
and fuel costs associated with the Ectosan® Vet and CleanTreat® operations.

Treatments performed with Ectosan® Vet and CleanTreat® reported efficacy
above 99% and the period for the fish to return to feed was nil days, an
important indicator of animal welfare. The roll-out of our transformational
sea lice solutions is progressing, with an increasing number of customers and
growing customer interest.  This led us to move ahead with commencing the
build of a third CleanTreat® system.  In addition we are exploring
alternative system configurations tailored to specific customer needs.

Post period end, on 3rd May, we announced the grant of a variation to the
Marketing Authorisation of Ectosan® in Norway, which enables the re-use of
treatment water on a second batch of fish. This is an important step towards
our goal of optimising the efficiency of our treatments, improving the appeal
of the solution to more customers.  Further trials to support the multiple
re-use of treatment water are ongoing.

 

Q2 FY22 commentary

 

The Group reported revenue of £39.2m, 29% above prior year of £30.4m. This
was driven by revenue growth in all business areas with Advanced Nutrition
reporting revenue +15%, Genetics +20% and Health +371% higher than the
comparative period in the prior year.

 

Adjusted EBITDA excluding fair value uplift from biological assets was £7.3m,
74% ahead of the prior year and 69% higher on a constant currency basis (Q2
FY21: £4.2m), reflecting higher revenues, operational leverage and good cost
control. By business area, Advanced Nutrition reported an increase in Adjusted
EBITDA of 36%, and Health was up +64%, while Genetics was -7% down. Including
fair value movements from biological assets Genetics was up 16%.

 

Operating costs of £10m were 6% above last year (Q2 FY21: 9.4m) primarily
driven by an increase in Health associated with the launch and roll-out of
Ectosan® Vet and CleanTreat®. R&D expenses of £1.6m were 11% below the
prior year (Q2 FY21: £1.8m) and represented 4% of Group revenues (Q2 FY21:
6%).  After an increase in depreciation and amortisation to £10.0m (Q2 FY21:
£6.0m), Group operating loss halved to £0.7m (Q2 FY21:£1.4m).

 

Net finance costs of £0.8m were lower than the comparative period (Q2 FY21:
£1.4m) due to lower interest rates following the listing of the NOK bond in
the prior year and a higher gain on the fair value of financial instruments,
offset by lower FX gains in Q2 FY22, leaving loss before tax at £1.5m for the
quarter (Q2 FY21: £2.7m).

 

The tax charge of £2.2m was higher than last year (Q2 FY21: £0.1m) due to
higher profits in Advanced Nutrition in the quarter in territories where no
loss relief was available.  Loss after tax for the quarter was £3.7m (Q2
FY21: £2.8m).

 

Oslo Listing

As previously announced, the Company engaged DNB Markets and Pareto Securities
as Joint Global Coordinators in connection with its assessment of a potential
listing in Oslo.  The Company has decided to pursue a listing on Euronext
Growth Oslo (operated by the Oslo Stock Exchange) during the second half of
the calendar year (subject to favourable market conditions).  Although no
final decision has been made, the Company then has an intention to uplist to
the Oslo Børs Stock Exchange within the following twelve months.

Outlook

 

The Group had an excellent start to the year and is trading in line with
market expectations.

 

Our fundamentals are strong and our opportunities are significant. Aquaculture
is a growth industry, supported by robust megatrends with an increasing focus
on sustainability challenges as it expands.  The answer to sustainability
lies in innovation - bringing forward new sustainable solutions. As a focused
aquaculture biotechnology company, Benchmark is well positioned to play an
important role, helping to improve sustainability across the aquaculture value
chain.

Medium term objectives

 

In 2020, following a management change, the Group completed a restructuring
programme to reduce the cash burn, right-size the cost base and strengthen the
Group's balance sheet, moving the Group from an R&D investment phase
towards profitability and returns. In addition, the new management team put in
place a new commercial culture and performance framework, as well as financial
processes to control costs and investments. This has resulted in consistent
and significant growth in Revenue and Adjusted EBITDA, and an improvement in
cashflow management, narrowing the Group's net loss. This positive momentum is
anchored by solid foundations with two well established, market leading
profitable business units with good financial visibility, and significant
growth opportunities which enable the Group to set medium term financial
objectives that would translate into attractive cash generation and returns.

 

The Group's medium term objectives are to achieve the following within three
to five years:

·    to generate revenue growth of 15%-18% per annum

·    to deliver an Adjusted EBITDA margin ranging from 25%-30%.

·    to deliver cashflow conversion ratio(1) of 70-80% from Adjusted
EBITDA, creating the ability for significant organic deleveraging of the
business by reducing net debt while increasing Adjusted EBITDA.

·    to produce free cash flow(2) as a percentage of sales of between 10%
and 15%.

·    to earn an Adjusted Return on Capital Employed(3) of more than 15%
within three to five years.

 

Our medium term Group objectives are underpinned by objectives of 10%-15%
annual revenue growth and 22-27% Adjusted EBITDA margin in Genetics and 7%-10%
annual revenue growth and 20-25% Adjusted EBITDA margin in Advanced Nutrition.
These are two well established, market leading businesses which provide good
financial visibility. Growth in the Company's third business unit, Health, is
driven by the roll-out of its sea lice solution Ectosan® Vet and CleanTreat®
from which the Company aims to generate £50 to £75m annual revenue within
three to five years. Adjusted EBITDA margin in this area is dependent on a
number of factors including obtaining an extended MA for multiple re-use of
treatment water, geographic expansion and on embedding the solution in our
customers' infrastructure through tailored configuration. The Group aims to
achieve a 60% Adjusted EBITDA margin in Health when Ectosan(®) Vet and
CleanTreat(®) are fully commercialised in the outer years of the period.

 

1.     Cash generated from operations after working capital and taxes as
percentage of Adj. EBITDA

2.     Free cash flow: Net cash from operating activities less capex and
lease payments (excluding cash interest)

3.     Adj. ROCE calculated as adjusted operating profit as a % of average
capital employed excluding goodwill and acquired intangible assets

 

Consolidated Income Statement for period ended 31 March 2022

 All figures in £000's                                                Notes  Q2 2022       Q2 2021       YTD Q2 2022   YTD Q2 2021   FY 2021

(unaudited)
(unaudited)
(unaudited)
(unaudited)
(audited)
 Revenue                                                              4      39,233        30,435        79,247        59,465        125,062
 Cost of sales                                                               (19,210)      (14,263)      (39,725)      (28,622)      (59,477)
 Gross profit                                                                20,023        16,172        39,522        30,843        65,585
 Research and development costs                                              (1,590)       (1,837)       (3,237)       (3,582)       (7,010)
 Other operating costs                                                       (9,984)       (9,411)       (19,907)      (18,696)      (38,221)
 Share of loss of equity-accounted investees, net of tax                     (24)          (30)          (528)         (641)         (905)
 Adjusted EBITDA²                                                            8,425         4,894         15,850        7,924         19,449
 Exceptional - restructuring, disposal and acquisition related items  5      908           (275)         908           (868)         (184)
 EBITDA¹                                                                     9,333         4,619         16,758        7,056         19,265
 Depreciation and impairment                                                 (5,557)       (1,723)       (10,052)      (3,494)       (8,359)
 Amortisation and impairment                                                 (4,484)       (4,260)       (8,872)       (8,178)       (16,283)
 Operating loss                                                              (708)         (1,364)       (2,166)       (4,616)       (5,377)
 Finance cost                                                                (2,684)       (2,466)       (4,747)       (4,395)       (7,987)
 Finance income                                                              1,930         1,092         1,769         5,758         4,185
 Loss before taxation                                                        (1,462)       (2,738)       (5,144)       (3,253)       (9,179)
 Tax on loss                                                          6      (2,189)       (104)         (3,616)       186           (2,397)
 Loss for the period                                                         (3,651)       (2,842)       (8,760)       (3,067)       (11,576)
 Loss for the period attributable to:
 - Owners of the parent                                                      (3,775)       (3,101)       (9,132)       (3,818)       (12,891)
 - Non-controlling interest                                                  124           259           372           751           1,315
                                                                             (3,651)       (2,842)       (8,760)       (3,067)       (11,576)

 Earnings per share
 Basic loss per share (pence)                                         7      (0.54)        (0.46)        (1.32)        (0.57)        (1.93)
 Diluted loss per share (pence)                                       7      (0.54)        (0.46)        (1.32)        (0.57)        (1.93)

 

1 EBITDA - Earnings before interest, tax, depreciation, amortisation, and
impairment

2 Adjusted EBITDA - EBITDA before exceptional items including acquisition
related items

 

The accompanying notes are an integral part of this consolidated financial
information.

 

Consolidated Statement of Comprehensive Income for the period ended 31 March 2022

 All figures in £000's                                                     Q2 2022       Q2 2021       YTD Q2 2022   YTD Q2 2021   FY 2021

(unaudited)
(unaudited)
(unaudited)
(unaudited)
(audited)

 Loss for the period                                                       (3,651)       (2,842)       (8,760)       (3,067)       (11,576)
 Other comprehensive income
 Items that are or may be reclassified subsequently to profit or loss
 Foreign exchange translation differences                                  9,812         (4,955)       7,201         (13,669)      (9,929)
 Cash flow hedges - changes in fair value                                  3,082         (77)          2,948         2,821         3,054
 Cash flow hedges - reclassified to profit or loss                         63            132           178           288           709
 Total comprehensive income for the period                                 9,306         (7,742)       1,567         (13,627)      (17,742)

 Total comprehensive income for the period attributable to:
 - Owners of the parent                                                    8,784         (8,033)       836           (14,657)      (19,329)
 - Non-controlling interest                                                522           291           731           1,030         1,587
                                                                           9,306         (7,742)       1,567         (13,627)      (17,742)

 

The accompanying notes are an integral part of this consolidated financial
information.

 Consolidated Balance Sheet as at 31 March 2022
                                                                          31 March 2022  31 March 2021  30 September 2021
 All figures in £000's                                             Notes  (unaudited)    (unaudited)    (audited)
 Assets
 Property, plant and equipment                                            81,568         70,160         78,780
 Right-of-use assets                                                      31,360         14,102         25,531
 Intangible assets                                                        226,912        230,739        229,040
 Equity-accounted investees                                               2,821          3,271          3,354
 Other investments                                                        15             15             15
 Biological and agricultural assets                                       17,089         15,293         21,244
 Non-current assets                                                       359,765        333,580        357,964
 Inventories                                                              22,140         19,469         20,947
 Biological and agricultural assets                                       24,294         21,111         17,121
 Trade and other receivables                                              47,275         31,008         46,498
 Cash and cash equivalents                                                46,294         53,630         39,460
 Current assets                                                           140,003        125,218        124,026
 Total assets                                                             499,768        458,798        481,990
 Liabilities
 Trade and other payables                                                 (33,284)       (29,960)       (46,668)
 Loans and borrowings                                              8      (13,546)       (7,279)        (10,654)
 Corporation tax liability                                                (7,733)        (3,971)        (5,634)
 Provisions                                                               (551)          -              (563)
 Current liabilities                                                      (55,114)       (41,210)       (63,519)
 Loans and borrowings                                              8      (114,185)      (102,867)      (109,737)
 Other payables                                                           (936)          (1,787)        (911)
 Deferred tax                                                             (27,524)       (29,442)       (28,224)
 Non-current liabilities                                                  (142,645)      (134,096)      (138,872)
 Total liabilities                                                        (197,759)      (175,306)      (202,391)
 Net assets                                                               302,009        283,492        279,599
 Issued capital and reserves attributable to owners of the parent
 Share capital                                                     9      704            670            670
 Additional paid-in share capital                                  9      420,824        400,574        400,682
 Capital redemption reserve                                               5              5              5
 Retained earnings                                                        (162,696)      (145,284)      (154,231)
 Hedging reserve                                                          (2,750)        (6,543)        (5,876)
 Foreign exchange reserve                                                 37,307         26,731         30,465
 Equity attributable to owners of the parent                              293,394        276,153        271,715
 Non-controlling interest                                                 8,615          7,339          7,884
 Total equity and reserves                                                302,009        283,492        279,599

 

The accompanying notes are an integral part of this consolidated financial
information.

 Consolidated Statement of Changes in Equity for the period ended 31 March 2022
                                                      Share     Additional paid-in share capital    Other       Hedging      Retained     Total attributable       Non-          Total

capital
reserves*
reserve
 earnings
 to equity holders of
controlling
equity

parent
interest
                                                      £000      £000                                £000        £000         £000         £000                     £000          £000
 As at 1 October 2021 (audited)                      670       400,682                             30,470      (5,876)      (154,231)    271,715                  7,884         279,599
 Comprehensive income for the period
 (Loss)/profit for the period                        -         -                                   -           -            (9,132)      (9,132)                  372           (8,760)
 Other comprehensive income                          -         -                                   6,842       3,126        -            9,968                    359           10,327
 Total comprehensive income for the period           -         -                                   6,842       3,126        (9,132)      836                      731           1,567
 Contributions by and distributions to owners
 Share issue                                         34        20,704                              -           -            -            20,738                   -             20,738
 Share issue costs recognised through equity         -         (562)                               -           -            -            (562)                    -             (562)
 Share-based payment                                 -         -                                   -           -            667          667                      -             667
 Total contributions by and distributions to owners  34        20,142                              -           -            667          20,843                   -             20,843
 Total transactions with owners of the Company       34        20,142                              -           -            667          20,843                   -             20,843
 As at 30 March 2022 (unaudited)                     704       420,824                             37,312      (2,750)      (162,696)    293,394                  8,615         302,009

 As at 1 October 2020 (audited)                      668       399,601                             40,683      (9,651)      (142,170)    289,131                  6,309         295,440
 Comprehensive income for the period
 (Loss)/profit for the period                        -         -                                   -           -            (3,818)      (3,818)                  751           (3,067)
 Other comprehensive income                          -         -                                   (13,947)    3,108        -            (10,839)                 279           (10,560)
 Total comprehensive income for the period           -         -                                   (13,947)    3,108        (3,818)      (14,657)                 1,030         (13,627)
 Contributions by and distributions to owners
 Share issue                                         2         973                                 -           -            -            975                      -             975
 Share-based payment                                 -         -                                   -           -            704          704                      -             704
 Total contributions by and distributions to owners  2         973                                 -           -            704          1,679                    -             1,679
 Total transactions with owners of the Company       2         973                                 -           -            704          1,679                    -             1,679
 As at 31 March 2021 (unaudited)                     670       400,574                             26,736      (6,543)      (145,284)    276,153                  7,339         283,492

 As at 1 October 2020 (audited)                      668       399,601                             40,683      (9,651)      (142,170)    289,131                  6,309         295,440
 Comprehensive income for the period
 (Loss)/profit for the period                        -         -                                   -           -            (12,891)     (12,891)                 1,315         (11,576)
 Other comprehensive income                          -         -                                   (10,213)    3,775        -            (6,438)                  272           (6,166)
 Total comprehensive income for the period           -         -                                   (10,213)    3,775        (12,891)     (19,329)                 1,587         (17,742)
 Contributions by and distributions to owners
 Share issue                                         2         1,081                               -           -            -            1,083                    -             1,083
 Share-based payment                                 -         -                                   -           -            830          830                      -             830
 Total contributions by and distributions to owners  2         1,081                               -           -            830          1,913                    -             1,913
 Changes in ownership
 Acquisition of NCI                                  -         -                                   -           -            -            -                        (12)          (12)
 Total changes in ownership interests                -         -                                   -           -            -            -                        (12)          (12)
 Total transactions with owners of the Company       2         1,081                               -           -            830          1,913                    (12)          1,901
 As at 30 Sept 2021 (audited)                        670       400,682                             30,470      (5,876)      (154,231)    271,715                  7,884         279,599

 

*Other reserves in this statement is an aggregation of capital redemption
reserve and foreign exchange reserve.

 

The accompanying notes are an integral part of this consolidated financial
information.

 Consolidated Statement of Cash Flows for the period ended 31 March 2022
                                                                Q2 2022 (unaudited)  Q2 2021       FY 2021 (audited)

(unaudited)
                                                                £000                 £000          £000
 Cash flows from operating activities
 Loss for the period                                            (8,760)              (3,067)       (11,576)
 Adjustments for:
 Depreciation and impairment of property, plant and equipment   4,187                2,457         5,017
 Depreciation and impairment of right-of-use assets             5,865                1,037         3,342
 Amortisation and impairment of intangible fixed assets         8,872                8,178         16,283
 Loss on sale of property, plant and equipment                  -                    -             46
 Gain on sale of other investments                              -                    (91)          -
 Finance income                                                 (225)                (43)          (1,442)
 Finance costs                                                  3,714                1,976         7,987
 Increase in fair value of contingent consideration receivable  (909)                -             -
 Share of loss of equity-accounted investees, net of tax        528                  641           905
 Foreign exchange losses                                        841                  (3,809)       (1,800)
 Share-based payment expense                                    667                  704           830
 Tax credit                                                     3,616                (186)         2,397
                                                                18,396               7,797         21,989
 Decrease/(increase) in trade and other receivables             108                  8,037         (8,178)
 Increase in inventories                                        (1,610)              (1,424)       (3,554)
 Increase in biological and agricultural assets                 (1,635)              (3,517)       (5,427)
 (Decrease)/increase in trade and other payables                (10,317)             (10,327)      5,547
 Decrease in provisions                                         (12)                 (22)          -
                                                                4,930                544           10,377
 Income taxes paid                                              (2,975)              (2,025)       (4,587)
 Net cash flows generated from/(used in) operating activities   1,955                (1,481)       5,790
 Investing activities
 Purchase of investments                                        (48)                 (247)         (578)
 Receipts from disposal of investments                          -                    99            9
 Purchases of property, plant and equipment                     (5,084)              (6,632)       (17,683)
 Purchase of intangibles                                        (1,523)              (2,337)       (5,038)
 Proceeds from sale of fixed assets                             3                    19            112
 Interest received                                              25                   42            88
 Net cash flows used in investing activities                    (6,627)              (9,056)       (23,090)
 Financing activities
 Proceeds of share issues                                       20,782               641           750
 Share-issue costs recognised through equity                    (607)                -             -
 Acquisition of NCI                                             -                    -             (12)
 Repayment of bank or other borrowings                          (939)                (2,405)       (3,106)
 Interest and finance charges paid                              (3,757)              (3,892)       (7,699)
 Repayments of lease liabilities                                (4,769)              (1,114)       (4,602)
 Net cash inflow/(outflow) from financing activities            10,710               (6,770)       (14,669)
 Net increase/(decrease) in cash and cash equivalents           6,038                (17,307)      (31,969)
 Cash and cash equivalents at beginning of period               39,460               71,605        71,605
 Effect of movements in exchange rate                           796                  (668)         (176)
 Cash and cash equivalents at end of period                     46,294               53,630        39,460

 

The accompanying notes are an integral part of this consolidated financial
information.

1. Basis of preparation

 

Benchmark Holdings plc (the 'Company') is a company incorporated domiciled in
the United Kingdom. These consolidated interim financial statements as at and
for the six months ended 31 March 2022 represents that of the Company and its
subsidiaries (together referred to as the 'Group').

 

These interim financial statements have been prepared in accordance with IAS
34 Interim Financial Reporting and should be read in conjunction with the
Group's last annual consolidated financial statements as at and for the year
ended 30 September 2021 ('last annual financial statements'). They do not
include all of the information required for a complete set of IFRS financial
statements.  However, selected explanatory notes are included to explain
events and transactions that are significant to an understanding of the
changes in the Group's financial position and performance since the last
annual financial statements.  Statutory accounts for the year ended 30
September 2021 were approved by the Directors on 29 November 2021 and have
been delivered to the Registrar of Companies.  The audit report received on
those accounts was unqualified and did not make a statement under section 498
of the Companies Act 2006 but did contain an emphasis of matter paragraph in
relation to going concern.

 

Going concern

 

The Group's business activities, together with the factors likely to affect
its future development, performance and position are set out in the Management
Report.

 

As at 31 March 2022 the Group had net assets of £302.0m (30 September 2021:
£279.6m), including cash of £46.3m (30 September 2021: £39.5m) as set out
in the consolidated balance sheet. The Group made a loss for the six months of
£8.8m (year ended 30 September 2021: loss £11.6m).

 

As noted in the Management Report, we have continued to see recovery in our
end markets as the COVID-19 vaccine programmes across the world gain momentum
against the pandemic, and strong performance particularly in our Advanced
Nutrition business area, being the segment most impacted by COVID-19 because
of its exposure to global shrimp markets, has given cause for optimism about
any lasting impact.  Even with this, the Directors remain cautious of any
possibility of return of restrictions before market recovery is fully complete
and available market analysis continues to be monitored to ensure appropriate
mitigating actions can be taken where necessary.

 

The uncertainty relating to any lasting impact on the Group of the pandemic
continues to be considered as part of the Directors' assessment of the going
concern assumption, and positive preventative measures implemented by the
Directors at an early stage in response to the pandemic continue to be in
force where necessary.  The Directors have reviewed forecasts and cash flow
projections covering the period to September 2023 including downside
sensitivity assumptions in relation to trading performance across the Group to
assess the impact on the Group's trading and cash flow forecasts and on the
forecast compliance with the covenants included within the Group's financing
arrangements. In the downside scenario analysis performed, the Directors
considered severe but plausible impacts of COVID-19 on the Group's trading and
cash flow forecasts, modelling reductions in the revenues and cash flows in
Advanced Nutrition, alongside modelling slower ramp up of the
commercialisation of Benchmark's new sea lice treatment in the Health business
area.  Other key downside sensitivities modelled included assumptions on
slower than expected recovery in global shrimp markets (affecting demand for
Advanced Nutrition products), and slower commercialisation of SPR shrimp.  As
noted in the Management Report, the Directors have continued to observe good
recovery in the shrimp markets in the strong performance of the Advanced
Nutrition business during the quarter.  Nevertheless, mitigating measures
within the control of management were implemented early in the pandemic and a
number of these remain in place and have been factored into the downside
analysis performed. These measures include reductions in areas of
discretionary spend, deferral of capital projects and temporary hold on
R&D for non-imminent products.

 

While it is difficult to predict the overall outcome and impact of the
pandemic, the group ended the first quarter with strong cash balances of
£43.6m after the £20.1m equity raise (net of costs) in Q1 and the Group has
sufficient liquidity and resources throughout the period under review under
all of the above scenario analysis, whilst still maintaining adequate headroom
against the borrowing covenants.  However, it should be noted that the
Group's main borrowing facilities are set to expire within the next 13 months
- the undrawn $15m RCF is set to expire in December 2022, and the NOK 850m
bond is due to expire in June 2023.  The cash flow forecasts reviewed rely on
these borrowing facilities being in place.

 

The Directors have commenced the refinancing process and are confident that
these facilities can be renewed or replaced before they expire, with trading
going well despite the headwinds of the pandemic, cash resources remaining
strong and relationships with finance providers positive.

 

Based on their assessment, the Directors believe it remains appropriate to
prepare the financial statements on a going concern basis.  However, as
disclosed in the last annual financial statements, while the Directors remain
confident that the current facilities will be renewed or replaced in the next
13 months, the requirement to do this represents a material uncertainty that
may cast significant doubt on the Group's ability to continue as a going
concern and therefore to continue realising its assets and discharging its
liabilities in the normal course of business.  The financial statements do
not include any adjustments that would result from the basis of preparation
being inappropriate.

1.     Basis of preparation (continued)

 

These financial statements have been prepared in accordance with international
accounting standards in conformity with the requirements of the Companies Act
2006 and International Financial Reporting Standards adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European Union.

 

The preparation of financial statements in compliance with adopted IFRSs
requires the use of certain critical accounting estimates. It also requires
Group management to exercise judgement in applying the Group's accounting
policies. The areas where significant judgements and estimates have been made
in preparing the financial statements and their effect are disclosed in Note
2.

 

2.     Accounting policies

 

The accounting policies adopted are consistent with those used in preparing
the consolidated financial statements for the financial year ended 30
September 2021.

 

Taxes on income in the interim periods are accrued using the tax rate that
would be applicable to expected total earnings.

Alternative performance measures ('APMs')

The Directors measure the performance of the Group based on a range of
financial measures, including measures not recognised by EU-adopted IFRS.
These APMs may not be directly comparable with other companies' APMs, and the
Directors do not intend these as a substitute for, or superior to, IFRS
measures.

Directors have presented the performance measures Adjusted EBITDA, Adjusted
Operating Profit, Adjusted Profit Before Tax and Adjusted EBITDA excluding
fair value movement on biological assets because they monitor performance at a
consolidated level using these and believe that these measures are relevant to
an understanding of the Group's financial performance (see note 10).
Furthermore, the Directors also refer to current period results using constant
currency, which are derived by retranslating current period results using
prior year's foreign exchange rates.

Use of estimates and judgements

The preparation of quarterly financial information requires management to make
certain judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities, income
and expense. Actual amounts may differ from these estimates.

 

In preparing these quarterly financial statements the significant judgements
made by management in applying the Group's accounting policies and the key
sources of estimation uncertainty were the same as those applied to the
consolidated financial statements for the year ended 30 September 2021.

3.     Segment information

 

Operating segments are reported in a manner consistent with the reports made
to the chief operating decision maker. It is considered that the role of chief
operating decision maker is performed by the Board of Directors.

 

The Group operates globally and for management purposes is organised into
reportable segments based on the following business areas:

 

·      Genetics - harnesses industry leading salmon breeding technologies
combined with state-of-the-art production facilities to provide a range of
year-round high genetic merit ova.

·      Advanced Nutrition - manufactures and provides technically advanced
nutrition and health products to the global aquaculture industry.

·      Health - the segment provides health products and services to the
global aquaculture market.

 

3.     Segment information (continued)

 

In order to reconcile the segmental analysis to the consolidated income
statement, corporate and inter-segment sales are also shown. Corporate sales
represent revenues earned from recharging certain central costs to the
operating business areas, together with unallocated central costs.

Measurement of operating segment profit or loss

Inter-segment sales are priced along the same lines as sales to external
customers, with an appropriate discount being applied to encourage use of
Group resources at a rate acceptable to local tax authorities.  This policy
was applied consistently throughout the current and prior period.

 

  Segmental Revenue
  All figures in £000's        Q2 2022       Q2 2021       YTD Q2 2022    YTD Q2 2021    FY 2021

(unaudited)
(unaudited)
(unaudited)
(unaudited)
(audited)
   Genetics                   11,408        9,514         26,603         22,130         46,797
   Advanced Nutrition         22,974        19,895        42,033         35,027         70,530
   Health                     4,916         1,044         10,693         2,337          7,832
   Corporate                  1,406         1,199         2,812          2,404          4,820
   Inter-segment sales        (1,471)       (1,217)       (2,894)        (2,433)        (4,917)
   Total                      39,233        30,435        79,247         59,465         125,062

  Segmental Adjusted EBITDA
  All figures in £000's        Q2 2022       Q2 2021       YTD Q2 2022    YTD Q2 2021    FY 2021

(unaudited)
(unaudited)
(unaudited)
(unaudited)
(audited)
   Genetics                   2,428         2,108         5,691          5,987          11,528
   Advanced Nutrition         7,154         5,247         11,474         6,240          13,802
   Health                     (454)         (1,446)       93             (2,563)        (2,685)
   Corporate                  (703)         (1,015)       (1,408)        (1,740)        (3,196)
   Total                      8,425         4,894         15,850         7,924          19,449

 

Reconciliations of segmental information to IFRS measures

 

  Reconciliation of Reportable Segments Adjusted EBITDA to Loss before
 taxation
  All figures in £000's                                                  Q2 2022       Q2 2021       YTD Q2 2022    YTD Q2 2021    FY 2021

(unaudited)
(unaudited)
(unaudited)
(unaudited)
(audited)
  Total reportable segment Adjusted EBITDA                              9,128         5,909         17,258         9,664          22,645
  Corporate Adjusted EBITDA                                             (703)         (1,015)       (1,408)        (1,740)        (3,196)
  Adjusted EBITDA                                                       8,425         4,894         15,850         7,924          19,449
  Exceptional - restructuring, disposal and acquisition related items   908           (275)         908            (868)          (184)
  Depreciation and impairment                                           (5,557)       (1,723)       (10,052)       (3,494)        (8,359)
  Amortisation and impairment                                           (4,484)       (4,260)       (8,872)        (8,178)        (16,283)
  Net finance costs                                                     (754)         (1,374)       (2,978)        1,363          (3,802)
  Loss before taxation                                                  (1,462)       (2,738)       (5,144)        (3,253)        (9,179)

 

 

4.     Revenue

The Group's operations and main revenue streams are those described in its
financial statements to 30 September 2021. The Group's revenue is derived from
contracts with customers.

Disaggregation of revenue

In the following tables, revenue is disaggregated by primary geographical
market and by sales of goods and services. The table includes a reconciliation
of the disaggregated revenue with the Group's reportable segments (see note
3).

 Sale of goods and provision of services

 

                          3 months ended 31 March 2022 (unaudited)
 All figures in £000's     Genetics    Advanced Nutrition     Health    Corporate    Inter-segment sales    Total
  Sale of goods           9,872       22,945                2,594      -            -                      35,411
  Provision of services   1,500       -                     2,322      -            -                      3,822
  Inter-segment sales     36          29                    -          1,406        (1,471)                -
                          11,408      22,974                4,916      1,406        (1,471)                39,233

                          3 months ended 31 March 2021 (unaudited)
 All figures in £000's     Genetics    Advanced Nutrition     Health    Corporate    Inter-segment sales    Total
  Sale of goods           8,542       19,883                1,039      -            -                      29,464
  Provision of services   966         -                     5          -            -                      971
  Inter-segment sales     6           12                    -          1,199        (1,217)                -
                          9,514       19,895                1,044      1,199        (1,217)                30,435

                          6 months ended 31 March 2022 (unaudited)
 All figures in £000's     Genetics    Advanced Nutrition     Health    Corporate    Inter-segment sales    Total
  Sale of goods           24,381      41,993                5,845      -            -                      72,219
  Provision of services   2,180       -                     4,848      -            -                      7,028
  Inter-segment sales     42          40                    -          2,812        (2,894)                -
                          26,603      42,033                10,693     2,812        (2,894)                79,247

                          6 months ended 31 March 2021 (unaudited)
 All figures in £000's     Genetics    Advanced Nutrition     Health    Corporate    Inter-segment sales    Total
  Sale of goods           20,031      35,010                2,317      -            -                      57,358
  Provision of services   2,087       -                     20         -            -                      2,107
  Inter-segment sales     12          17                    -          2,404        (2,433)                -
                          22,130      35,027                2,337      2,404        (2,433)                59,465

 

4.     Revenue (continued)

 

Sale of goods and provision of services (continued)

Primary geographical markets

 

                          12 months ended 30 September 2021 (audited)
 All figures in £000's     Genetics    Advanced Nutrition     Health    Corporate    Inter-segment sales    Total
  Sale of goods           41,947      70,458                6,135      -            -                      118,540
  Provision of services   4,825       -                     1,697      -            -                      6,522
  Inter-segment sales     25          72                    -          4,820        (4,917)                -
                          46,797      70,530                7,832      4,820        (4,917)                125,062

                          3 months ended 31 March 2022 (unaudited)
 All figures in £000's     Genetics    Advanced Nutrition     Health    Corporate    Inter-segment sales    Total
  Norway                  6,115       211                   4,288      -            -                      10,614
  India                   260         3,711                 -          -            -                      3,971
  Singapore               -           3,013                 -          -            -                      3,013
  Greece                  -           1,832                 -          -            -                      1,832
  Faroe Islands           1,709       5                     147        -            -                      1,861
  Turkey                  -           2,238                 -          -            -                      2,238
  UK                      899         14                    30         -            -                      943
  Ecuador                 -           1,227                 -          -            -                      1,227
  Chile                   224         5                     150        -            -                      379
  Rest of Europe          1,590       1,278                 -          -            -                      2,868
  Rest of World           575         9,411                 301        -            -                      10,287
  Inter-segment sales     36          29                    -          1,406        (1,471)                -
                          11,408      22,974                4,916      1,406        (1,471)                39,233

                          3 months ended 31 March 2021 (unaudited)
 All figures in £000's     Genetics    Advanced Nutrition     Health    Corporate    Inter-segment sales    Total
  Norway                  4,553       191                   272        -            -                      5,016
  India                   -           3,041                 -          -            -                      3,041
  Singapore               -           2,409                 -          -            -                      2,409
  Greece                  25          1,642                 -          -            -                      1,667
  Faroe Islands           1,563       5                     -          -            -                      1,568
  Turkey                  -           1,702                 -          -            -                      1,702
  UK                      1,226       40                    (220)      -            -                      1,046
  Ecuador                 -           1,041                 -          -            -                      1,041
  Chile                   31          4                     598        -            -                      633
  Rest of Europe          1,590       1,362                 24         -            -                      2,976
  Rest of World           520         8,446                 370        -            -                      9,336
  Inter-segment sales     6           12                    -          1,199        (1,217)                -
                          9,514       19,895                1,044      1,199        (1,217)                30,435

4.     Revenue (continued)

 

Primary geographical markets (continued)

 

                         6 months ended 31 March 2022 (unaudited)
 All figures in £000's    Genetics    Advanced Nutrition     Health    Corporate    Inter-segment sales    Total
  Norway                 15,794      323                   8,956      -            -                      25,073
  India                  400         7,719                 -          -            -                      8,119
  Singapore              -           4,151                 -          -            -                      4,151
  Greece                 -           3,471                 -          -            -                      3,471
  Faroe Islands          2,601       6                     277        -            -                      2,884
  Turkey                 -           3,932                 -          -            -                      3,932
  UK                     2,856       28                    118        -            -                      3,002
  Ecuador                -           2,291                 -          -            -                      2,291
  Chile                  340         5                     553        -            -                      898
  Rest of Europe         3,361       2,581                 -          -            -                      5,942
  Rest of World          1,209       17,486                789        -            -                      19,484
  Inter-segment sales    42          40                    -          2,812        (2,894)                -
                         26,603      42,033                10,693     2,812        (2,894)                79,247

                         6 months ended 31 March 2021 (unaudited)
 All figures in £000's    Genetics    Advanced Nutrition     Health    Corporate    Inter-segment sales    Total
  Norway                 12,263      257                   435        -            -                      12,955
  India                  -           6,267                 -          -            -                      6,267
  Singapore              -           3,350                 -          -            -                      3,350
  Greece                 25          3,472                 -          -            -                      3,497
  Faroe Islands          3,371       9                     -          -            -                      3,380
  Turkey                 -           3,445                 -          -            -                      3,445
  UK                     2,656       66                    15         -            -                      2,737
  Ecuador                -           2,000                 -          -            -                      2,000
  Chile                  37          4                     1,435      -            -                      1,476
  Rest of Europe         2,750       2,800                 26         -            -                      5,576
  Rest of World          1,016       13,340                426        -            -                      14,782
  Inter-segment sales    12          17                    -          2,404        (2,433)                -
                         22,130      35,027                2,337      2,404        (2,433)                59,465

 

4.     Revenue (continued)

 

Primary geographical markets (continued)

 

                         12 months ended 30 September 2021 (audited)
 All figures in £000's    Genetics    Advanced Nutrition     Health    Corporate    Inter-segment sales    Total
  Norway                 27,129      570                   3,689      -            -                      31,388
  India                  -           12,166                3          -            -                      12,169
  Singapore              -           7,544                 -          -            -                      7,544
  Greece                 25          6,108                 -          -            -                      6,133
  Faroe Islands          5,636       18                    348        -            -                      6,002
  Turkey                 -           5,977                 -          -            -                      5,977
  UK                     3,843       117                   622        -            -                      4,582
  Ecuador                -           4,066                 -          -            -                      4,066
  Chile                  437         7                     2,335      -            -                      2,779
  Rest of Europe         6,922       4,208                 26         -            -                      11,156
  Rest of World          2,780       29,677                809        -            -                      33,266
  Inter-segment sales    25          72                    -          4,820        (4,917)                -
                         46,797      70,530                7,832      4,820        (4,917)                125,062

 

5.     Exceptional - restructuring, disposal, and acquisition related items

 

Items that are material because of their size or nature, non-recurring and
whose significance is sufficient to warrant separate disclosure and
identification within the consolidated financial statements are referred to as
exceptional items. The separate reporting of exceptional items helps to
provide an understanding of the Group's underlying performance.

 

 All figures in £000's                             Q2 2022       Q2 2021       YTD Q2 2022   YTD Q2 2021   FY 2021

(unaudited)
(unaudited)
(unaudited)
(unaudited)
(audited)
  Acquisition related items                        -             -             -             -             (850)
  Exceptional restructuring and disposal items     (908)         275           (908)         868           1,034
 Total exceptional items                           (908)         275           (908)         868           184

 

Exceptional restructuring and disposal items in Q2 2022 is a credit of
£909,000 (YTD Q2 2022: £909,000) relating to an increase in the fair value
of contingent consideration to be received following the disposal of Improve
International Limited and its subsidiaries on 23 June 2020.

6.     Taxation

 

 All figures in £000's                                     Q2 2022       Q2 2021       YTD Q2 2022   YTD Q2 2021   FY 2021

(unaudited)
(unaudited)
(unaudited)
(unaudited)
(audited)

 Analysis of charge in period
 Current tax:
 Current income tax expense on profits for the period      2,642         875           5,007         1,631         5,383
 Adjustment in respect of prior periods                    -             -             -             -             502
 Total current tax charge                                  2,642         875           5,007         1,631         5,885

 Deferred tax:
 Origination and reversal of temporary differences         (453)         (506)         (1,391)       (1,552)       (3,228)
 Deferred tax movements in respect of prior periods        -             (265)         -             (265)         (260)
 Total deferred tax credit                                 (453)         (771)         (1,391)       (1,817)       (3,488)

 Total tax charge/(credit)                                 2,189         104           3,616         (186)         2,397

 

 

7.     Loss per share

 

Basic loss per share is calculated by dividing the loss attributable to
ordinary equity holders of the Company by the weighted average number of
ordinary shares in issue during the period.

                                                            Q2 2022       Q2 2021       YTD Q2 2022   YTD Q2 2021   FY 2021

(unaudited)
(unaudited)
(unaudited)
(unaudited)
(audited)
 Loss attributable to equity holders of the parent (£000)   (3,775)       (3,101)       (9,132)       (3,818)       (12,891)
 Weighted average number of shares in issue (thousands)     703,926       669,425       692,474       668,667       669,459
 Basic loss per share (pence)                               (0.54)        (0.46)        (1.32)        (0.57)        (1.93)

 

 

Diluted loss per share is calculated by adjusting the weighted average number
of ordinary shares outstanding to assume conversion of all dilutive potential
ordinary shares. This is done by calculating the number of shares that could
have been acquired at fair value (determined as the average market price of
the Company's shares for the period) based on the monetary value of the
subscription rights attached to outstanding share options and warrants. The
number of shares calculated above is compared with the number of shares that
would have been issued assuming the exercise of the share options and
warrants.

 
 

Therefore, the Company is required to adjust the earnings per share
calculation in relation to the share options that are in issue under the
Company's share-based incentive schemes, and outstanding warrants. However, as
any potential ordinary shares would be anti-dilutive due to losses being made
there is no difference between Basic loss per share and Diluted loss per share
for any of the periods being reported.

 

At 31 March 2022, a total of 5,184,054 potential ordinary shares have not been
included within the calculation of statutory diluted loss per share for the
period as they are anti-dilutive (30 September 2021: 4,621,300 and 31 March
2021: 3,581,820). These potential ordinary shares could dilute earnings/loss
per share in the future.

 

8.     Loans and borrowings

 

The Group's borrowing facilities include a USD 15m RCF provided by DNB Bank
ASA (50%) and HSBC UK Bank PLC (50%). At 31 March 2022 the whole facility (USD
15m) was undrawn.

9.     Share capital and additional paid-in share capital

                                               Number       Share Capital  Additional

paid-in

share

capital
 Allotted, called up and fully paid                         £000           £000
 Ordinary shares of 0.1 pence each
 Balance at 30 September 2021                  670,374,484  670            400,682
 Shares issued through placing and open offer  33,401,620   34             20,069
 Exercise of share options                     184,694      -              73
 Balance at 31 March 2022                      703,960,798  704            420,824

 

On 29 November 2021, the Company issued 33,401,620 new ordinary shares of 0.1
pence each by way of a placing and subscriptions at an issue price of 62.0
pence per share. Gross proceeds of £20.7m were received for the placing and
subscription shares. Non-recurring costs of £0.6m were in relation to the
share issues and this has been charged to the share premium account (presented
within Additional paid-in share capital).

 

During the period ended 31 March 2022, the Group issued a total of 184,694
ordinary shares of 0.1 pence each to certain employees of the Group relating
to share options, of which 12,509 were exercised at a price of 0.1 pence and
172,185 were exercised at a price of 42.5 pence.

 

10.   Alternative performance measures and other metrics

 

Management has presented the performance measures EBITDA, Adjusted EBITDA,
Adjusted EBITDA before fair value movement in biological assets, Adjusted
Operating Profit and Adjusted Profit Before Tax because it monitors
performance at a consolidated level using these and believes that these
measures are relevant to an understanding of the Group's financial
performance.

Adjusted EBITDA which reflects underlying profitability, is earnings before
interest, tax, depreciation, amortisation, impairment, and exceptional items
including acquisition related items and is shown on the Income Statement.

Adjusted EBITDA before fair value movements in biological assets, which is
Adjusted EBITDA before the non-cash fair value movements in biological assets
arising from their revaluation in line with International Accounting
Standards.

Adjusted Operating Profit is operating loss before exceptional items including
acquisition related items and amortisation and impairment of intangible assets
excluding development costs as reconciled below.

Adjusted Profit Before Tax is earnings before tax, amortisation and impairment
of intangibles assets excluding development costs, and exceptional items
including acquisition related items as reconciled below.

These measures are not defined performance measures in IFRS. The Group's
definition of these measures may not be comparable with similarly titled
performance measures and disclosures by other entities.

Reconciliation of Adjusted Operating Profit to Operating Loss

 All figures in £000's                                                             Q2 2022       Q2 2021       YTD Q2 2022   YTD Q2 2021   FY 2021

(unaudited)
(unaudited)
(unaudited)
(unaudited)
(audited)
 Revenue                                                                           39,233        30,435        79,247        59,465        125,062
 Cost of sales                                                                     (19,210)      (14,263)      (39,725)      (28,622)      (59,477)
 Gross profit                                                                      20,023        16,172        39,522        30,843        65,585
 Research and development costs                                                    (1,590)       (1,837)       (3,237)       (3,582)       (7,010)
 Other operating costs                                                             (9,984)       (9,411)       (19,907)      (18,696)      (38,221)
 Depreciation and impairment                                                       (5,557)       (1,723)       (10,052)      (3,494)       (8,359)
 Amortisation of capitalised development costs                                     (448)         -             (896)         -             (299)
 Share of loss of equity accounted investees net of tax                            (24)          (30)          (528)         (641)         (905)
 Adjusted operating profit                                                         2,420         3,171         4,902         4,430         10,791
 Exceptional - restructuring, disposal and acquisition related items               908           (275)         908           (868)         (184)
 Amortisation and impairment of intangible assets excluding development costs      (4,036)       (4,260)       (7,976)       (8,178)       (15,984)
 Operating loss                                                                    (708)         (1,364)       (2,166)       (4,616)       (5,377)

10.  Alternative performance measures and other metrics (continued)

 

Reconciliation of Loss Before Taxation to Adjusted Profit Before Tax

 All figures in £000's                                                             Q2 2022       Q2 2021       YTD Q2 2022   YTD Q2 2021   FY 2021

(unaudited)
(unaudited)
(unaudited)
(unaudited)
(audited)

 Loss before taxation                                                              (1,462)       (2,738)       (5,144)       (3,253)       (9,179)
 Exceptional - restructuring, disposal and acquisition related items               (908)         275           (908)         868           184
 Amortisation and impairment of intangible assets excluding development costs      4,036         4,260         7,976         8,178         15,984
 Adjusted profit before tax                                                        1,666         1,797         1,924         5,793         6,989

 

Other Metrics
 

 

 All figures in £000's                       Q2 2022       Q2 2021       YTD Q2 2022   YTD Q2 2021   FY 2021

(unaudited)
(unaudited)
(unaudited)
(unaudited)
(audited)
 Total R&D Investment
 Research and development costs              1,590         1,837         3,237         3,582         7,010
 Internal capitalised development costs      777           1,121         1,404         2,181         4,813
 Total R&D investment                        2,367         2,958         4,641         5,763         11,823

 

 

 All figures in £000's                                                    Q2 2022       Q2 2021       YTD Q2 2022    YTD Q2 2021    FY 2021

(unaudited)
(unaudited)
(unaudited)
(unaudited)
(audited)
 Adjusted EBITDA excluding fair value movement in biological assets
 Adjusted EBITDA                                                         8,425         4,894         15,850         7,924          19,449
 Exclude fair value movement                                             (1,101)       (682)         (1,005)        (1,958)        (3,323)
 Adjusted EBITDA excluding fair value movement in biological assets      7,324         4,212         14,845         5,966          16,126

 

Liquidity

 

Following the refinancing in June 2019 a key financial covenant is a minimum
liquidity of £10m, defined as cash plus undrawn facilities.

 

                              31 March 2022
 All figures in £000's        (unaudited)
 Cash and cash equivalents    46,294
 Undrawn bank facility        11,405
                              57,699

 

11.   Net debt

Net debt is cash and cash equivalents less loans and borrowings.

                                                                     31 March 2022  31 March 2021  30 September 2021
 All figures in £000's                                               (unaudited)    (unaudited)    (audited)
 Cash and cash equivalents                                           46,294         53,630         39,460
 Loans and borrowings (excluding lease liabilities) - current        (1,647)        (1,517)        (1,612)
 Loans and borrowings (excluding lease liabilities) - non-current    (95,270)       (94,639)       (94,792)
 Net debt excluding lease liabilities                                (50,623)       (42,526)       (56,944)
 Lease liabilities - current                                         (11,899)       (5,762)        (9,042)
 Lease liabilities - non-current                                     (18,915)       (8,228)        (14,945)
 Net debt                                                            (81,437)       (56,516)       (80,931)

 

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